MACY'S, INC. CASH ACCOUNT PENSION PLAN

Exhibit 10.32

MACY’S, INC.

CASH ACCOUNT PENSION PLAN

(Amending and restating the Federated Department Stores, Inc.

Cash Account Pension Plan effective as of January 1, 2007)

TABLE OF CONTENTS

 

 

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MACY’S, INC.

CASH ACCOUNT PENSION PLAN

(Amending and restating the Federated Department Stores, Inc.

Cash Account Pension Plan effective as of January 1, 2007)

ARTICLE 1

NAME AND PURPOSE OF PLAN

1.1 Name of Plan . The plan set forth herein shall be known as the Macy’s, Inc. Cash Account Pension Plan (hereinafter referred to, for all purposes of this document, as the Plan).

1.2 Purpose of Plan . The Plan provides additional retirement income to persons who participate in the Plan. It is intended that the Plan (together with the Trust used in conjunction with the Plan) qualify as a tax-favored plan and trust under Sections 401(a) and 501(a) of the Code, and it shall be interpreted in a manner consistent with Sections 401(a) and 501(a) of the Code.

1.3 Amendment of Prior Version of Plan .

1.3.1 This Plan document is intended to amend and restate, effective as of the Effective Amendment Date (January 1, 2007), the Federated Department Stores, Inc. Cash Account Pension Plan as it was in existence on December 31, 2006 and to supersede all versions of the Plan and all amendments to the Plan that both (i) were adopted prior to the date on which this Plan document is signed and (ii) had an effective date that was on or prior to the Effective Amendment Date. For all purposes hereof, however, any reference to the Plan shall, when appropriate, refer to all versions of the Plan which were in effect before the Effective Amendment Date.

1.3.2 In addition, certain provisions of this Plan document amend provisions of the Plan, the May Retirement Plan (The May Department Stores Company Retirement Plan), and the Federated Department Stores, Inc. Former Subsidiary Pension Plan (which latter two plans were merged into the Plan effective as of July 31, 2006) as of dates earlier than the Effective Amendment Date in order to satisfy certain requirements of applicable law.

1.4 Special May Retirement Plan Provisions . Certain Employees will accrue benefits on or after the Effective Amendment Date under eligibility, vesting, benefit, and ancillary provisions that mainly reflect the terms of the May Retirement Plan as in effect prior to its July 31, 2006 merger into the Plan (with only minor adjustments). Those May Retirement Plan provisions are set forth in Appendix 1 to this Plan. In this regard, the provisions of Articles 2 through 17 below do not apply to the Employees who participate on or after the Effective Amendment Date under the provisions of Appendix 1 to this Plan (except to the extent the provisions of Articles 2 through 17 below are incorporated by reference into Appendix 1 by the terms of such Appendix or to the extent the context of such provisions clearly indicates that they are intended to apply to Appendix 1).

 

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ARTICLE 2

GENERAL DEFINITIONS; GENDER AND NUMBER

2.1 General Definitions . For purposes of the Plan, the following terms shall have the meanings hereinafter set forth unless the context otherwise requires.

2.1.1 “Accrued Benefit” means, when applied to any Participant and his or her interest under this Plan as of any specified date (for purposes of this Subsection 2.1.1, the “determination date”), the monthly amount of the benefit to which the Participant would be entitled under the Plan: (i) if the Participant permanently ceased to be an Employee as of the determination date (if he or she has not already done so); (ii) if the Participant was fully vested in ( i.e. , had a nonforfeitable right to) his or her benefit under the Plan as of the determination date (even if he or she is not yet fully vested in such benefit); and (iii) if the Participant’s benefit under the Plan is paid in the form of a Single Life Annuity commencing as of the Participant’s Normal Retirement Date (or, if the determination date is later than the Participant’s Normal Retirement Date, commencing as of the determination date). For purposes of the Plan and when the Participant’s Plan benefit is based on the amount credited to his or her Cash Balance Account, the Participant’s “Accrued Benefit” as of the determination date is calculated:

(a) first, by calculating the amount that as of the determination date is credited to the Participant’s Cash Balance Account;

(b) next, in the event (and only in the event) the determination date occurs before the Participant’s Normal Retirement Date, by projecting the amount calculated under paragraph (a) immediately above from the determination date to the Participant’s Normal Retirement Date at an annual interest rate equal to the greater of (i) the annual interest rate on 30-year U.S. Treasury securities for the second calendar month which precedes the start of the Plan Year during which the determination date occurs or (ii) an interest rate equal to 5-1/4% per annum; and

(c) next and last, by converting the amount calculated under paragraph (a) above, as projected to the Participant’s Normal Retirement Date under the provisions of paragraph (b) immediately above in the event the determination date occurs before the Participant’s Normal Retirement Date, into an actuarially equivalent hypothetical Single Life Annuity benefit that commences as of the later of the determination date or the Participant’s Normal Retirement Date. The actuarial assumptions used to make such conversion shall be the actuarial assumptions described in Subsection 10.5.3 below that would apply under the terms of such subsection were the determination date treated as the commencement date of the Accrued Benefit. (The actuarial assumptions set forth in Subsection 10.5.3 below are an applicable interest rate and an applicable mortality assumption intended to be in accord with Section 417(e)(3) of the Code.)

2.1.2 “Accrued Benefit Final Payment Amount” means, when applied to any Participant and his or her interest under this Plan as of any specified date (for purposes of this Subsection 2.1.2, the “initial payment date”), the monthly amount of the benefit to which the Participant would be entitled under the Plan: (i) if the Participant permanently ceased to be an Employee as of the initial payment date (if he or she has not already done so); (ii) if the Participant was fully vested in ( i.e. , had a nonforfeitable right to) his or her benefit under the Plan as of the initial payment date (even if he or she is not yet fully vested in such benefit); and (iii) if the

 

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Participant’s benefit under the Plan is paid in the form of a Single Life Annuity commencing as of the initial payment date (even if it precedes or follows the Participant’s Normal Retirement Date).

(a) When the initial payment date occurs on or after the Participant’s Normal Retirement Date and the Participant’s Plan benefit is based on the amount credited to his or her Cash Balance Account, the Participant’s “Accrued Benefit Final Payment Amount” as of the initial payment date is, for purposes of the Plan, equal to his or her Accrued Benefit determined as of the initial payment date.

(b) When the initial payment date occurs prior to the Participant’s Normal Retirement Date, the Participant’s “Accrued Benefit Final Payment Amount” as of the initial payment date is, for purposes of the Plan, equal to the monthly amount of the retirement benefit that would be payable to the Participant under the Plan if such benefit were paid in the form of a Single Life Annuity that commenced as of the initial payment date and if such benefit were actuarially equivalent to (i) the Participant’s retirement benefit under the Plan had such benefit been paid in the form of a Single Life Annuity that commenced as of the Participant’s Normal Retirement Date and that had a monthly amount equal to the Participant’s Accrued Benefit determined as of the Participant’s initial payment date or (ii) the amount that as of the initial payment date is credited to the Participant’s Cash Balance Account, whichever produces the greater monthly amount. The actuarial assumptions used to make any such actuarial equivalency determination shall be the actuarial assumptions described in Subsection 10.5.3 below that would apply under the terms of such subsection were the initial payment date treated as the commencement date of the Participant’s Plan benefit. (The actuarial assumptions described in Subsection 10.5.3 below are an applicable interest rate and an applicable mortality assumption intended to be in accord with Section 417(e)(3) of the Code).

2.1.3 “Active Participant” means, at any relevant time, a person who at such relevant time is a Participant in the Plan other than as a Retired Participant.

2.1.4 “Affiliated Employer” means each of: (i) Macy’s; (ii) each corporation which is (and only during the period it is) a member of a controlled group of corporations (within the meaning of Section 414(b) of the Code as modified when applicable by Section 415(h) of the Code) which includes Macy’s; (iii) each trade or business whether or not incorporated which is (and only during the period it is) under common control (within the meaning of Section 414(c) of the Code as modified when applicable by Section 415(h) of the Code) with Macy’s; (iv) each member (and only during the period it is such a member) of an affiliated service group (within the meaning of Section 414(m) of the Code) which includes Macy’s; and (v) each other entity required to be aggregated with Macy’s under Section 414(o) of the Code (and only during the period it is required to be so aggregated).

2.1.5 “Annuity” means a form of benefit without life insurance which provides for equal payments at monthly installments (or, only to the extent provided in Subsection 10.2.2 below, quarterly installments) over more than a one year period.

2.1.6 “Board” means the Board of Directors of Macy’s.

2.1.7 “Cash Balance Account” means, with respect to any Participant, the bookkeeping account established with respect to the Participant under Article 4 below.

 

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2.1.8 “Code” means the Internal Revenue Code of 1986 and the sections thereof, as it and they exist as of the Effective Amendment Date (or, when used in a Plan provision that has an effective date that is earlier than the Effective Amendment Date, as of such earlier effective date) or are thereafter amended or renumbered.

2.1.9 “Committee” means the Pension and Profit Sharing Committee appointed to administer the Plan in accordance with the provisions of Article 13 below.

2.1.10 “Compensation” means, with respect to an Employee and for any specified period, the amount determined in accordance with the following paragraphs of this Subsection 2.1.10.

(a) Subject to paragraphs (b), (c), (d), and (e) below, the Employee’s “Compensation” for any specified period shall mean his or her wages (within the meaning of Section 3401(a) of the Code) and all other compensation paid during such period to the Employee by each Affiliated Employer (in the course of the Affiliated Employer’s trade or business) for his or her services as an Employee and for which the Affiliated Employer is required to furnish him or her a written statement under Section 6041(d), 6051(a)(3), or 6052 of the Code ( e.g. , compensation reported in Box 1 on a Form W-2). Such Compensation shall be determined without regard to any rules under Section 3401(a) of the Code that limit the remuneration included in wages based on the nature or location of the employment or the services performed.

(b) Notwithstanding the provisions of paragraph (a) above, the Employee’s “Compensation” for any period that begins on or after January 1, 2008 shall not in any event include any wages or other compensation paid after he or she has ceased to be an Employee, unless such wages or other compensation is paid within 2-1/2 months after (or, if later, by the end of the Plan Year in which) he or she has ceased to be an Employee and reflects either:

(1) payments that, absent his or her severance from employment with the Affiliated Employers, would have been paid to him or her while he or she was an Employee and would have been regular compensation for services during his or her regular working hours, compensation for services outside his or her regular working hours (such as overtime or shift differentials), commissions, bonuses, or similar compensation; or

(2) payments for accrued bona fide sick, vacation, or other leave, but only if he or she would have been able to use the leave if he or she had not ceased to be an Employee.

In no event, even if paid within 2-1/2 months after (or, if later, by the end of the Plan Year in which) he or she has ceased to be an Employee, shall any severance pay be treated as part of the Employee’s “Compensation” for any period that begins on or after January 1, 2008 under the provisions of this paragraph (b).

(c) Notwithstanding the provisions of paragraph (a) above, the Employee’s Compensation for any period shall also not include any reimbursement or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred

 

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compensation, and welfare benefits, even if any such items are included in the Employee’s income for Federal income tax purposes.

(d) In addition to the amounts included in the Employee’s “Compensation” for any specified period under paragraphs (a), (b), and (c) above, and notwithstanding such paragraphs, the Employee’s “Compensation” for any period shall also include any amounts which are not treated as the Employee’s Compensation for such specified period under paragraphs (a), (b), and (c) above solely because such amounts are considered elective contributions that are made by an Affiliated Employer on behalf of the Employee and are not includable in the Employee’s gross income for Federal income tax purposes by reason of Section 125, 402(e)(3), 402(h), and/or 132(f)(4) of the Code ( i.e. , elective contributions under a cafeteria plan, a cash or deferred arrangement in a profit sharing plan, a simplified employee pension plan, or an arrangement under which qualified transportation fringes can be chosen) or any other types of deferred compensation or contributions described in Code Section 414(s)(2) or Treasury Regulations Section 1.414(s)-1(c)(4).

(e) Finally, notwithstanding any of the provisions of the foregoing paragraphs of this Subsection 2.1.10, the “Compensation” of the Employee for any twelve consecutive month period which is taken into account under any other provision of the Plan shall not exceed the dollar amount set forth in Section 401(a)(17)(A) of the Code, as such amount is adjusted under Code Section 401(a)(17)(B) by the Secretary of the Treasury or his or her delegate for the calendar year in which such twelve consecutive month period begins. The provisions of this paragraph (e) shall not only be effective as of the Effective Amendment Date but shall also, for each Prior Plan that was in effect on January 1, 2002, be effective as of January 1, 2002 with respect to any period beginning on or after such date. In accordance with such Code sections, the dollar amount set forth in Code Section 401(a)(17)(A), as adjusted under Section 401(a)(17)(B) of the Code, is:

(1) $150,000 for any such twelve consecutive month period that began in 1996 or an earlier calendar year;

(2) $160,000 for any such twelve consecutive month period that began in 1997, 1998, or 1999;

(3) $170,000 for any such twelve consecutive month period that began in 2000 or 2001;

(4) $200,000 for any twelve month determination period that began in 2002 or 2003;

(5) $205,000 for any twelve month determination period that began in 2004;

(6) $210,000 for any twelve month determination period that began in 2005;

(7) $220,000 for any twelve month determination period that began in 2006;

 

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(8) $225,000 for any twelve month determination period that begins in 2007;

(9) $230,000 for any twelve month determination period that begins in 2008; and

(10) a dollar amount to be determined under Code Sections 401(a)(17)(A) and 401(a)(17)(B) for any twelve month determination period that begins after 2008.

2.1.11 “Covered Compensation” means, with respect to an Employee and for any specified period, the amount that would be considered the Employee’s Compensation for such period under the provisions of Subsection 2.1.10 above if the adjustments described in the following paragraphs of this Subsection 2.1.11 applied under Subsection 2.1.10 above.

(a) Each reference to “Employee,” “Affiliated Employer,” or “Affiliated Employer’s” that is contained in Subsection 2.1.10 above shall be deemed a reference to “Covered Employee,” “Employer,” and “Employer’s,” respectively.

(b) The following types of irregular or additional compensation shall be deemed not to be included in any event in the “Compensation” of the Employee for any period under Subsection 2.1.10 above (even if such amounts would have been so included in the absence of this paragraph (b)): director’s fees; contributions made to or payments received from a plan of deferred compensation; amounts realized from or recognized by reason of a restricted stock award; amounts realized from or recognized by reason of stock appreciation rights; amounts realized from or recognized by reason of the exercise of a stock option or the disposition of stock acquired under a stock option; long-term cash bonuses based on meeting performance goals which are measured over more than a one year period; moving expense reimbursements or payments made to cover mortgage interest differentials resulting from a move; merchandise or savings bond awards; reimbursements for tuition or educational expenses; cost of living allowances; amounts resulting from a forgiveness of a loan; retention bonuses that either are paid under an Affiliated Employer policy which states that such bonuses shall not be considered as compensation under the Plan or under the Employer’s retirement plans in general or are paid by reason of or in accordance with the approval of an order of a court; any compensation that is paid as severance pay, including payments made in settlement of disputes involving termination of employment, even when it is paid before the Employee ceases to be an Employee and regardless of whether or not it is paid in installments or in a lump sum; amounts which represent a sign-on bonus for agreeing to be employed by the Employer; sick pay or disability payments made under a third-party payor arrangement; any imputed income or the like arising under welfare or other fringe benefit plans or programs (including but not limited to group term life insurance, use of employer cars, financial counseling, and employee discounts); and any payments made to cover any personal income taxes resulting from the imputing of income by reason of welfare or other fringe benefits.

2.1.12 “Covered Employee” generally refers to an individual who is eligible to be a Participant in the Plan if and after he or she meets all of the participation requirements set forth in Article 4 below (including certain minimum age and minimum service requirements set forth in Article 4 below). In addition, only service while a “Covered Employee” is taken into account in determining the amount of any benefit accrued by a Participant under the Plan. For these

 

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and all other purposes of the Plan, a “Covered Employee” means an individual who meets the criteria described in the following paragraphs of this Subsection 2.1.12.

(a) Subject to the following paragraphs of this Subsection 2.1.12, a person shall be considered a “Covered Employee” for any period if he or she is or was during such period an Employee of the Employer.

(b) Notwithstanding the provisions of paragraph (a) above, a person shall not in any event be considered a “Covered Employee” for any period during which he or she is not or was not on an employee payroll of the Employer or during which he or she is or was a Leased Employee. In particular, it is expressly intended that any person not treated as an employee by the Employer on its employee payroll records (for example, when the Employer treats the person as an independent contractor and/or reports his or her compensation from the Employer on any type of Form 1099 or any successor form thereto) shall not be considered a Covered Employee for purposes of this Plan even if a court or administrative agency determines that such individual is a common law employee of the Employer.

(c) Also notwithstanding the provisions of paragraph (a) above, none of the following individuals shall be considered a “Covered Employee” for purposes of the Plan: (i) except where Macy’s has otherwise agreed, any person who is employed in a leased department in a store operated by the Employer; (ii) any person who is stationed outside the United States (including its territories, whether or not incorporated or organized) from the time he or she first becomes employed by the Employer or who receives his or her Compensation in foreign currency; (iii) any person whose compensation consists solely of a retainer or fee; or (iv) any person who is represented by a collective bargaining unit (unless a collective bargaining agreement between the authorized representatives of such collective bargaining unit and the Employer approves such person’s eligibility to participate in plans both which are qualified as tax-favored plans under Section 401(a) of the Code and the sponsor, as such term is defined in ERISA, of which is the Employer).

(d) Also, subject to the following provisions of this paragraph (d) but notwithstanding the provisions of paragraph (a) above, unless included in the Plan by action of the Board or pursuant to an applicable collective bargaining agreement, a “Covered Employee” for purposes of the Plan shall not include any person who is a participant, eligible for participation, or in the process of qualifying for participation in any other defined benefit plan (within the meaning of Section 414(j) of the Code) which qualifies under Section 401(a) of the Code and the cost of which is borne, in whole or in part, by any Affiliated Employer. However, a person who otherwise qualifies as a “Covered Employee” under the other provisions of this Subsection 2.1.12 shall not be considered other than as a “Covered Employee” merely because of his or her participation in another defined benefit pension plan if such participation relates solely to employment which preceded the date on which he or she would otherwise become a Participant under the Plan and the person’s benefits under such other plan relate solely to such past service.

(e) Further, when any corporation or other entity which is an Employer at any point in time later loses its status as an Employer (because it no longer is part of a controlled group of corporations which includes Macy’s or because of any other reason), any person who is considered a “Covered Employee” under this Plan solely by reason of his or her employment by such corporation or other entity immediately prior to such corporation or other

 

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entity losing its status as an Employer shall no longer be considered a “Covered Employee” under this Plan upon such corporation’s or other entity’s loss of Employer status.

(f) Notwithstanding any of the foregoing provisions of this Subsection 2.1.12, any person who on August 30, 2005 (the effective date of the May Company Merger) was a May Company Defined Benefit Plan Active Participant shall not ever be considered a Covered Employee for purposes of this Plan. Further and also notwithstanding any of the foregoing provisions of this Subsection 2.1.12, any person who, on any date that occurs both (i) in the period beginning on August 31, 2005 and ending on August 31, 2008 and (ii) prior to such person becoming on or after August 30, 2005 either a May Company Defined Benefit Plan Active Participant or a Macy’s Defined Benefit Plan Active Participant, is a May Company Employee shall not be considered a Covered Employee for purposes of this Plan on such date. Finally and also notwithstanding any of the foregoing provisions of this Subsection 2.1.12, any person who was not a May Company Defined Benefit Plan Active Participant on August 30, 2005 but who becomes a May Company Defined Benefit Plan Active Participant on any date in the period beginning on August 31, 2005 and ending on August 31, 2008 (and has not on any prior date in such period become a Macy’s Defined Benefit Plan Active Participant) shall not ever be considered a Covered Employee for purposes of this Plan. For purposes of this paragraph (f), the following terms shall have the meanings indicated below.

(1) “May Company” means the corporation that, immediately prior to the May Company Merger, was named The May Department Stores Company and had an employer identification number (as assigned by the Internal Revenue Service) of 43-1104396.

(2) “May Company Employer” means each of May Company and each corporation, partnership, or other organization other than May Company that, immediately prior to the May Company Merger, was in a chain of corporations, partnerships, and/or other organizations that began with May Company and in which at least 80% of the voting interests in such corporation, partnership, or other organization in such chain (other than May Company) was owned by May Company or another corporation, partnership, or other organization in such chain.

(3) “May Company Merger” means the merger of May Company into a subsidiary of Macy’s, the effective date of which was August 30, 2005.

(4) “May Company Employee” means, as of any date, a person who on such date (i) is or was a common law employee of the Employer or an Affiliated Employer and (ii) is or was working at or assigned to an office, store, or other facility that had immediately prior to the May Company Merger been an office, store, or other facility of a May Company Employer.

(5) “May Company Defined Benefit Plan Active Participant” means, as of any date, a person who on such date (i) is or was a May Company Employee and (ii) meets or met all requirements of the May Retirement Plan (as defined in Subsection 2.1.25 below), including any minimum service, age, entry date, and employee classification requirements of such plan, to be a participant in such plan.

(6) “Macy’s Defined Benefit Plan Active Participant” means, as of any date, a person who on such date (i) is or was a common law employee of the Employer,

 

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(ii) is or was not a May Company Employee, and (iii) meets or met all requirements of this Plan, including this Plan’s minimum service, age, entry date, and employee classification requirements, to be a participant in this Plan.

2.1.13 “Effective Amendment Date” refers to the effective date of this amendment and restatement of the Plan and means January 1, 2007.

2.1.14 “Employee” means any person who either (i) is employed as a common law employee of an Affiliated Employer ( i.e. , a person whose work procedures are subject to control by an Affiliated Employer) or (ii) is a Leased Employee. The following paragraphs of this Subsection 2.1.14 shall also apply in determining when a person is an Employee for purposes of the Plan.

(a) A person who is an Employee shall no longer be considered an Employee when he or she dies or otherwise terminates all employment with the Affiliated Employers.

(b) A person who is an Employee shall not be deemed to have terminated such employment while he or she is then on a bona fide military leave, sick leave, vacation leave, or other leave of absence (where there is a reasonable expectation that he or she will return to perform services for an Affiliated Employer) if the period of the leave does not exceed six months (or, if longer, so long as the person retains a right to reemployment with an Affiliated Employer under an applicable law or by contract). For purposes hereof, a bona fide leave of absence of an Employee shall be deemed to include an absence (i) by reason of the pregnancy of the Employee, (ii) by reason of the birth of a child of the Employee, (iii) by reason of the placement of a child with the Employee in connection with the adoption of such child by the Employee, or (iv) for purposes of caring for such child for a period immediately following such birth or placement.

2.1.15 “Employer” means each Affiliated Employer described in clauses (i), (ii), and (iii) of Subsection 2.1.4 above. Except where the context otherwise is clear (such as when a provision is referring to “an” Employer), any reference to the Employer in this Plan shall be deemed to be referring collectively to all of the corporations, partnerships, and other entities which comprise the Employer. Notwithstanding the foregoing, any corporation or other entity (for purposes of this Subsection 2.1.15, an “acquired company”) that first becomes an Affiliated Employer after the Effective Amendment Date as a result of the acquisition by an Employer of the stock or interests of the acquired company or substantially all of the assets of a trade or business previously operated by another entity shall not be considered a part of the Employer unless and until the first date as of which both (i) the agreements by which such stock, interests, or assets were acquired by an Employer do not require that the employees of the acquired company be eligible to actively participate in another defined benefit plan (within the meaning of Code Section 414(j)) maintained by the acquired company or another Affiliated Employer (and do not otherwise prohibit the employees of the acquired company from participating in the Plan) and (ii) Macy’s has taken such actions (such as, but not necessarily limited to, the providing of notices) so as to clearly indicate that employees of the acquired company are to begin participating in the Plan as of such date.

 

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2.1.16 “ERISA” means the Employee Retirement Income Security Act of 1974 and the sections thereof, as it and they exist as of the Effective Amendment Date or are thereafter amended or renumbered.

2.1.17 “Former Highly Compensated Employee” means, with respect to any Plan Year (for purposes of this Subsection 2.1.17, the “subject Plan Year”), any person (i) who is a former Employee at the start of the subject Plan Year (or who, while an Employee at the start of such year, performs no services for an Affiliated Employer during such year by reason of being on a leave of absence or for some other reason), (ii) who had a separation year prior to the subject Plan Year, and (iii) who was a Highly Compensated Employee for the person’s separation year or any other Plan Year which ended on or after the person’s 55th birthday. Except as is otherwise required in regulations issued under Section 414(q) of the Code, a person’s “separation year” refers to the Plan Year in which the person ceased to be an Employee. For purposes of this rule, an Employee who performs no services for any Affiliated Employer during the subject Plan Year shall be treated as having ceased to be an Employee in the Plan Year in which such Employee last performed services for any Affiliated Employer.

2.1.18 “Highly Compensated Employee” means, with respect to any Plan Year (for purposes of this Subsection 2.1.18, the “subject Plan Year”), any person who is an Employee during at least part of the subject Plan Year and (i) was at any time a 5% owner (as defined in Section 416(i)(1) of the Code) of any Affiliated Employer during the subject Plan Year or the immediately preceding Plan Year (for purposes of this Subsection 2.1.18, the “look-back Plan Year”) or (ii) received in the look-back Plan Year Compensation in excess of the dollar amount set forth in Section 414(q)(1)(B)(i) of the Code, as such dollar amount is adjusted under Code Section 414(q)(1) by the Secretary of the Treasury or his or her delegate for such look-back Plan Year. In accordance with such Code sections, the dollar amount set forth in Code Section 414(q)(1)(B)(i), as adjusted under Section 414(q)(1) of the Code, is (i) $100,000 for the look-back Plan Year that begins on January 1, 2006 and for the look-back Plan Year that begins on January 1, 2007, (ii) $105,000 for the look-back Plan Year that begins on January 1, 2008, and (iii) a dollar amount to be determined under Code Sections 414(q)(1)(B)(i) and 414(q)(1) for any look-back Plan Year that begins after 2008.

2.1.19 “Joint and Survivor Annuity” means an Annuity payable as follows. Monthly payments are made to a Participant for his or her life, and after his or her death monthly survivor payments continue to a contingent beneficiary chosen by the Participant (who may be any person other than the person who is the Participant’s spouse as of the date payments under the Annuity begin to the Participant) for such contingent beneficiary’s life. Each monthly survivor payment to the contingent beneficiary shall be equal in amount to 50% or an optional percentage (as is chosen by the Participant when he or she elects the form of his or her retirement benefit under the subsequent provisions of the Plan) of the monthly payment amount made during the life of the Participant under the same Annuity. For purposes of the immediately preceding sentence, the “optional percentage” means either 100%, 75%, or 66-2/3%. A Joint and Survivor Annuity shall end with the monthly payment due for the month in which occurs the death of the survivor of the Participant and his or her contingent beneficiary.

2.1.20 “Leased Employee” means any person who provides services to an Affiliated Employer in a capacity other than as a common law employee of the Affiliated Employer, in accordance with each of the following three requirements: (i) the services are provided pursuant to one or more agreements between the Affiliated Employer and one or more

 

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leasing organizations; (ii) the individual has performed such services for the Affiliated Employer on a substantially full-time basis for a period of at least one year; and (iii) such services are performed under the primary direction or control by the Affiliated Employer. The determination of who is a Leased Employee shall be consistent with the provisions of Section 414(n) of the Code and, to the extent not inconsistent with Code Section 414(n), any regulations issued under Section 414(n) of the Code.

2.1.21 “Life and Five Year Certain Annuity” means an Annuity payable as follows. Monthly payments are made to a Participant for his or her life, and such payments end with the monthly payment for the month in which occurs the Participant’s death if at least 60 monthly payments have been made on behalf of the Participant. If not, the monthly payments continue after the Participant’s death to a contingent beneficiary (who is chosen by the Participant when he or she elects the form of his or her retirement benefit under the subsequent provisions of the Plan) until 60 monthly payments have been made, when aggregated, to the Participant and the contingent beneficiary. In addition, the following paragraphs of this Subsection 2.1.21 apply to such Life and Five Year Certain Annuity.

(a) The Participant may name any person or entity as the contingent beneficiary under this form of Annuity, including a contingent beneficiary only to take effect if another named contingent beneficiary dies before the period certain payment period under such form of Annuity expires. If any contingent beneficiary dies after payments have begun under this form of Annuity but before all scheduled payments have been made and no other person or entity has previously been named to succeed as contingent beneficiary, the successor contingent beneficiary shall be deemed to be the estate of such deceased contingent beneficiary.

(b) If monthly payments are payable under this form of Annuity after the Participant’s death to a contingent beneficiary which is an estate, the monthly payments otherwise remaining to be paid shall be converted to a single sum (which is equal to the then present value of the otherwise remaining payments) and paid to the estate.

2.1.22 “Life and Ten Year Certain Annuity” has the same meaning as and is subject to the same rules as apply to a Life and Five Year Certain Annuity, as such term is defined in Subsection 2.1.21 above, except that each reference to “60” contained in Subsection 2.1.21 above shall be read for this purpose to be a reference to “120.”

2.1.23 “Life and Twenty Year Certain Annuity” has the same meaning as and is subject to the same rules as apply to a Life and Five Year Certain Annuity, as such term is defined in Subsection 2.1.21 above, except that each reference to “60” contained in Subsection 2.1.21 above shall be read for this purpose to be a reference to “240.”

2.1.24 “Macy’s” means Macy’s, Inc. Macy’s is the sponsor of this Plan. Prior to June 1, 2007, Macy’s was named Federated Department Stores, Inc., and the change to Macy’s, Inc. represented only a change in name.

2.1.25 “May Retirement Plan” means and refers to both (i) The May Department Stores Company Retirement Plan, a Prior Plan that merged into the Plan effective as of July 31, 2006 and that immediately prior to its merger was sponsored by Macy’s and identified for reporting purposes by an employer identification number of 13-3324058 and a plan number of 023, and (ii) the provisions of the plan document applicable to The May Department Stores

 

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Company Retirement Plan that has represented a part of the Plan since July 31, 2006 (and as to which special provisions apply under Appendix 1 hereto).

2.1.26 “Normal Retirement Age” means, with respect to any Participant, the later of: (i) the date of the Participant’s 65th birthday; or (ii) the fifth annual anniversary of the date the Participant first became a Participant in the Plan.

2.1.27 “Normal Retirement Date” means, with respect to any Participant, the first day of the first month which begins on or after the date on which the Participant first attains his or her Normal Retirement Age.

2.1.28 “Notice” means a written notice provided to the Committee (or a Committee Representative or a Plan Representative) and which is made either in a writing approved by the Committee for the purpose as to which the notice is being provided or on a form prepared by the Committee for the purpose as to which the notice is being provided.

2.1.29 “Participant” means a person who has become a Participant in the Plan in accordance with the provisions of Article 4 below, so long as he or she remains a Participant under the provisions of Article 4 below.

2.1.30 “Plan” means the Macy’s, Inc. Cash Account Pension Plan, as set forth in this document and as may be amended hereafter. In addition, any reference to the “Plan” contained in this document also refers to all Prior Plans.

2.1.31 “Prior Plan” means and refers to: (i) each defined benefit plan (within the meaning of Section 414(j) of the Code) which as of the Effective Amendment Date or any earlier date is or was restated by this document or by any such other preceding plan; and (ii) each defined benefit plan which as of or prior to the Effective Amendment Date is or was merged into or had assets and liabilities directly transferred to any of such preceding plans.

(a) If the provisions of this document refer to or require the determination of the amount of any retirement benefits that would apply under any Prior Plan had such Prior Plan continued in effect after the Effective Amendment Date or any earlier date, or the amount of any retirement benefit that would apply under any Prior Plan if such benefit were determined immediately prior to the Effective Amendment Date or any earlier date, the provisions of the Prior Plan shall be used to make such determination. The provisions of the Prior Plans are hereby incorporated by reference in this document to the extent necessary to make any such determination.

(b) The Prior Plans include, but are not necessarily limited to, each of the following plans:

(1) the Federated Department Stores, Inc. Cash Account Pension Plan (which was renamed as the Macy, Inc. Cash Account Pension Plan as of June 1, 2007) as in effect from January 1, 1997 through December 31, 2006;

(2) each restated version of the Federated Department Stores, Inc. Pension Plan as in effect prior to January 1, 1997;

 

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(3) the Allied Stores Corporation Retirement Benefit Plan, which merged into another Prior Plan as of December 31, 1995;

(4) the Pension Plan for Employees of Broadway Stores Inc., which merged into another Prior Plan as of January 31, 1996;

(5) the R.H. Macy & Co., Inc. Pension Plan, which merged into another Prior Plan as of December 31, 1996;

(6) the Supplemental Pension Plan for Hourly Employees of The Emporium, which merged into another Prior Plan as of December 31, 1996;

(7) the Amended and Restated Joseph Horne Co., Inc. Pension Plan, which merged into another Prior Plan as of December 31, 1996;

(8) the Federated Department Stores, Inc. Former Subsidiary Pension Plan, which merged into another Prior Plan as of July 31, 2006; and

(9) The May Department Stores Company Retirement Plan, which merged into another Prior Plan as of July 31, 2006.

2.1.32 “Plan Year” means a calendar year.

2.1.33 “Qualified Joint and Survivor Annuity” means an Annuity payable as follows. Monthly payments are made to a Participant for his or her life, and after his or her death monthly survivor payments continue to the person who was the Participant’s spouse as of the date payments under the Annuity commence to be paid to the Participant (for purposes of this Subsection 2.1.33, the “Participant’s spouse”) for the Participant’s spouse’s life. Each monthly survivor payment to the Participant’s spouse shall be equal in amount to 50% (or, if the Participant otherwise chooses when he or she elects the form of his or her retirement benefit under the subsequent provisions of the Plan, the optional percentage) of the monthly payment amount made during the life of the Participant under the same Annuity. For purposes of the immediately preceding sentence, the “optional percentage” means 100%, 75%, or 66-2/3%. A Qualified Joint and Survivor Annuity shall end with the monthly payment due for the month in which occurs the death of the survivor of the Participant and the Participant’s spouse. In addition, for purposes of the subsequent provisions of the Plan, any reference to a “Qualified Joint and 50% Survivor Annuity” means a Qualified Joint and Survivor Annuity under which each monthly survivor payment to the applicable Participant’s spouse is equal in amount to 50% of the monthly payment amount made during the life of the Participant under the same Annuity.

2.1.34 “Required Commencement Date” means, with respect to any Participant, a date determined by the Committee for administrative reasons to be the date as of which the Participant’s nonforfeitable retirement benefit under the Plan (if any such benefit would then exist and not yet have begun to be paid) is to commence in order to meet the requirements of Section 401(a)(9) of the Code (or, for any Participant who attained age 70-1/2 prior to January 1, 1999, in order to meet the requirements of Code Section 401(a)(9) as in effect before the effect of the Small Business Job Protection Act of 1996 is taken into account), which date shall be a first day of a month and subject to the parameters described in the following paragraphs of this Subsection 2.1.34. The provisions of this Subsection 2.1.34 shall not only be effective as of the

 

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Effective Amendment Date but shall also, for each Prior Plan that was in effect on January 1, 2003, be effective as of January 1, 2003 with respect to any Plan Year beginning on or after that date.

(a) Subject to paragraph (e) below, for a Participant who attained age 70-1/2 on or after January 1, 1987 and prior to January 1, 1999, his or her Required Commencement Date must be no later than, and no earlier than six months prior to, the April 1 of the calendar year next following the calendar year in which he or she attained age 70-1/2.

(b) Subject to paragraph (e) below, for a Participant who attains or attained age 70-1/2 prior to January 1, 1987 or on or after January 1, 1999 and is not a 5% owner of an Affiliated Employer, his or her Required Commencement Date must be no later than, and no earlier than six months prior to, the April 1 of the calendar year next following the later of: (i) the calendar year in which he or she attains or attained age 70-1/2; or (ii) the calendar year in which he or she ceases or ceased to be an Employee.

(c) Subject to paragraph (e) below, for a Participant who attains or attained age 70-1/2 prior to January 1, 1987 or on or after January 1, 1999 and is a 5% owner of an Affiliated Employer, his or her Required Commencement Date must be no later than, and no earlier than six months prior to, the April 1 of the calendar year next following the later of: (i) the calendar year in which he or she attains or attained age 70-1/2; or (ii) the earlier of the calendar year with or within which ends the Plan Year in which he or she becomes or became a 5% owner of an Affiliated Employer or the calendar year in which he or she ceases or ceased to be an Employee.

(d) A Participant is deemed to be a 5% owner of an Affiliated Employer for purposes hereof if he or she is a 5% owner of the Affiliated Employer (as determined under Section 416(i)(1)(B) of the Code) at any time during the Plan Year ending with or within the calendar year in which he or she attains age 66-1/2 or any subsequent Plan Year. Once a Participant meets this criteria, he or she shall be deemed a 5% owner of the Affiliated Employer even if he or she ceases to own 5% of the Affiliated Employer in a later Plan Year.

(e) Notwithstanding the foregoing, if a Participant first earns a nonforfeitable retirement benefit under the Plan after the date which would otherwise be his or her Required Commencement Date under the foregoing paragraphs of this Subsection 2.1.34, then his or her Required Commencement Date shall not be determined under such foregoing provisions but rather must be a date within the calendar year next following the calendar year in which he or she first earns a nonforfeitable retirement benefit under the Plan.

2.1.35 “Retired Participant” means, as of any relevant time, a Participant who has previously ceased to be an Employee when eligible for a retirement benefit under the other provisions of the Plan, who is still receiving or remains eligible for the payment of his or her benefit under this Plan, and who has not again begun accruing additional benefits under the Plan after the latest date he or she ceased employment.

2.1.36 “Single Life Annuity” means an Annuity payable as follows. Monthly payments are made to a Participant for his or her life and end with the monthly payment due for the month in which occurs the Participant’s death.

 

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2.1.37 “Social Security Leveling Annuity” means an Annuity payable as follows. Monthly payments must begin being paid to a Participant prior to the first month (for purposes of this Subsection 2.1.37, the “first Social Security month”) in which the Participant would be entitled (upon proper application) to receive on a reduced or unreduced basis his or her primary old-age Federal Social Security Act benefit (which first Social Security month is generally the month in which the Participant attains age 62). Further, the monthly payments under such Annuity are made to the Participant in a manner that (i) treats the monthly payments under such Annuity and the monthly payments of the Participant’s primary old-age Federal Social Security Act benefit that the Committee reasonably determines would be received by the Participant beginning in his or her first Social Security month (if such Social Security benefit would begin in such month) as if they were part of one combined Single Life Annuity (for purposes of this Subsection 2.1.37, the “combined Annuity”) and (ii) makes, to the maximum extent possible, the payment under the Social Security Leveling Annuity for each month prior to the Participant’s first Social Security month equal to the payment under the combined Annuity for each month on or after the Participant’s first Social Security month. For purposes hereof, the Committee shall determine the monthly payments of the Participant’s primary old-age Federal Social Security Act benefit that would be received by the Participant beginning in his or her first Social Security month on the basis of the benefit and wage base levels in effect under the Federal Social Security Act on the date as of which the Social Security Leveling Annuity is to commence and on the basis of a compensation record determined in accordance with the rules described in the following paragraphs of this Subsection 2.1.37.

(a) For each of the first calendar year in which the Participant completed an Hour of Service and all prior calendar years, the Participant shall be deemed to have wages for Federal Social Security Act purposes equal to the result produced by discounting his or her Compensation for the calendar year immediately following the first calendar year in which the Participant completed an Hour of Service backwards to the applicable calendar year, using for this purpose the actual change in the average wages as determined by the Federal Social Security Administration.

(b) For each of the calendar years beginning with the calendar year immediately following the first calendar year in which the Participant first completed an Hour of Service and ending with the last full calendar year ending on or before the latest date on which he or she completed an Hour of Service, the Participant shall be deemed to have wages for Federal Social Security Act purposes equal to his or her Compensation for the applicable calendar year.

(c) For the period which begins on the first day of the first calendar year ending after the latest date on which he or she completed an Hour of Service and ends on the date the Participant first attains his or her Normal Retirement Age, the Participant shall be deemed to have an annual rate of wages for Federal Social Security Act purposes equal to the Participant’s Compensation for the last full calendar year ending on or before the latest date on which he or she completed an Hour of Service.

2.1.38 “Social Security Retirement Age” means, with respect to any Participant, the age used as the Participant’s retirement age under Section 216(l) of the Federal Social Security Act, as amended, except that such section shall be applied without regard to the age increase factor and as if the early retirement age under such Section were age 62. Accordingly, as of the Effective Amendment Date, the Social Security Retirement Age for purposes of the

 

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Plan is: (i) age 65 for a Participant who is born before January 1, 1938; (ii) age 66 for a Participant who is born after December 31, 1937 and before January 1, 1955; and (iii) age 67 for a Participant who is born after December 31, 1954.

2.1.39 “Trust” means the trust agreement which is created by Macy’s to serve as the funding media for this Plan. The Trust is hereby incorporated by reference and made a part of this Plan. Any reference to the Plan herein shall, where the context permits, be deemed to be a reference to the Plan and the Trust.

2.1.40 “Trust Fund” means any assets of the Plan which are held under the Trust.

2.1.41 “Trustee” means the persons or entity serving at any time as trustee of the Trust.

2.1.42 “Vested Participant” means a Participant who is (or, if he or she ceased to be an Employee immediately, would be) entitled to some retirement benefit under the Plan.

2.2 Gender and Number . For purposes of the Plan, words used in any gender shall include all other genders, words used in the singular form shall include the plural form, and words used in the plural form shall include the singular form, as the context may require.

 

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ARTICLE 3

SERVICE DEFINITIONS AND RULES

3.1 Service Definitions . For purposes of the Plan, the following terms related to service shall have the meanings hereinafter set forth in this Section 3.1 unless the context otherwise requires.

3.1.1 “Break-in-Service” means, with respect to an Employee, any period which meets the conditions set forth in the following paragraphs of this Subsection 3.1.1.

(a) The Employee shall be considered to have incurred a Break-in-Service for any Plan Year which begins on or after the Effective Amendment Date and for which the Employee is credited with not more than 500 Hours of Service.

(b) If the Employee participated in a Prior Plan (or was in the process of qualifying to participate in a Prior Plan) before the Effective Amendment Date, the Employee shall also be considered to have incurred a Break-in-Service for any twelve month period which occurs prior to the Effective Amendment Date to the extent that the provisions of the Prior Plan treated such period as a break-in-service of the Employee as of the date immediately preceding the Effective Amendment Date.

3.1.2 “Eligibility Service” means, with respect to an Employee, the Employee’s period of service with the Employer to be taken into account for purposes of determining his or her eligibility to become a Participant in the Plan, computed in accordance with the following paragraphs of this Subsection 3.1.2.

(a) If the Employee completes at least 1,000 Hours of Service during the twelve consecutive month period commencing on his or her Employment Date, he or she shall be credited with one year of Eligibility Service at the end of such twelve consecutive month period.

(b) Further, if the Employee fails to complete at least 1,000 Hours of Service during the twelve consecutive month period commencing on his or her Employment Date, he or she shall be credited with one year of Eligibility Service at the end of the first Plan Year commencing after such Employment Date during which he or she completes at least 1,000 Hours of Service.

(c) If the Employee both (i) ceases to be an Employee prior to his or her completing at least 1,000 Hours of Service in a computation period described in paragraph (a) or (b) above, and (ii) suffers a Break-in-Service before being subsequently reemployed as an Employee, his or her service with the Affiliated Employers prior to his or her reemployment shall be disregarded in determining the Eligibility Service he or she needs under the Plan to become a Participant (and his or her Reemployment Date shall be treated as if it were his or her Employment Date for such purposes).

3.1.3 “Employment Date” means, with respect to an Employee, the date on which the Employee first performs an Hour of Service.

 

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3.1.4 “Hour of Service” means, with respect to an Employee, each hour for which the Employee: (i) is paid, or is entitled to payment, for the performance of duties as an Employee; (ii) is directly or indirectly paid, or is entitled to payment, for a period of time (without regard to whether the employment relationship is terminated) when he or she performs no duties as an Employee due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence; or (iii) is paid for any reason in connection with his or her employment as an Employee an amount as “back pay,” irrespective of mitigation of damages. The crediting of Hours of Service to an Employee under the Plan shall also be subject to the provisions of the following paragraphs of this Subsection 3.1.4.

(a) Notwithstanding the foregoing provisions of this Subsection 3.1.4, an hour for which the Employee is paid or entitled to be paid on account of a period during which no duties are performed as an Employee will not be credited as an Hour of Service if the payment is made or due under a plan maintained solely for the purpose of complying with applicable workers’ compensation, unemployment compensation, or disability insurance laws or if the payment solely reimburses the Employee for medical or medically related expenses incurred by the Employee.

(b) Also, subject to the other provisions of this Subsection 3.1.4, Hour of Service credit shall be calculated in accordance with paragraphs (b) and (c) of the Department of Labor Regulations Section 2530.200b-2, which paragraphs are hereby incorporated by reference into this Plan.

(c) If the Employee is exempt from the minimum wage and overtime pay requirements of the Federal Fair Labor Standards Act, and as to whom records of actual hours worked are thereby not needed to be kept for such purposes, he or she shall be credited with: (i) if the period on which the Employee is paid is a week (or a multiple of a week), 45 Hours of Service for each week included in each such period for which he or she would be credited with at least one Hour of Service under the other provisions of this Subsection 3.1.4; (ii) if the period on which the Employee is paid is a semi-monthly period, 95 Hours of Service for each such semi-monthly payroll period for which he or she would be credited with at least one Hour of Service under the other provisions of this Subsection 3.1.4; or (iii) if the period on which the Employee is paid is a month (or a multiple of a month), 190 Hours of Service for each month included in each such period for which he or she would be credited with at least one Hour of Service under the other provisions of this Subsection 3.1.4.

(d) Hours of Service to be credited to the Employee in connection with each period (i) which is of no more than 31 days, (ii) which begins on the first day of a pay period for the Employee (for purposes of this paragraph (d), the “initial pay period”), (iii) which ends on the last day of the Employee’s pay period which includes the pay day for the initial pay period, and (iv) which overlaps two computation periods or occurs in a month which overlaps two computation periods shall be credited on behalf of the Employee to the computation period in which falls the first day of the month during which the pay day for the initial pay period occurs.

3.1.5 “Reemployment Date” means, with respect to an Employee who has previously incurred a Break-in-Service, the first day after the Employee’s most recent Break-in-Service on which the Employee performs an Hour of Service.

 

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3.1.6 “Six-Year Break-in-Service” means, with respect to an Employee who has ceased to be an Employee, a period of six or more Breaks-in-Service which is not interrupted by any period which is not included in a period of a Break-in-Service.

3.1.7 “Vesting Service” means, with respect to a Participant, the Participant’s service with the Employer which is taken into account under the Plan for vesting purposes ( i.e. , for purposes of determining the Participant’s eligibility for and the nonforfeitable percentage of a retirement benefit under the Plan), and for purposes of helping to determine the pay credit amounts to be credited to the Participant’s Cash Balance Account under the subsequent provisions of the Plan, computed in accordance with the following paragraphs of this Subsection 3.1.7.

(a) The Participant shall be credited with one year of Vesting Service for each Plan Year which begins on or after the Effective Amendment Date and for which the Participant is credited with at least 1,000 Hours of Service.

(b) The Participant shall also be credited with years of Vesting Service equal to the number of whole years of vesting service he or she was credited with as of December 31, 2006 under the terms (as then in effect) of the Prior Plans in which he or she participated prior to the Effective Amendment Date (taking into account the provisions of each such Prior Plan for determining vesting service, including each such plan’s provisions concerning breaks-in-service). In no event, however, shall any period which occurs prior to the Effective Amendment Date be counted more than once in determining the Participant’s years of Vesting Service.

(c) Notwithstanding the foregoing, any Vesting Service completed by the Participant prior to a Six-Year Break-in-Service of the Participant which ends after the Effective Amendment Date shall be disregarded under the Plan if the Participant did not have a nonforfeitable interest in any retirement benefit under the Plan at the time such Break-in-Service began.

3.2 Special Credited Employment .

3.2.1 For purposes of the Plan and except as is otherwise provided in the following provisions of this Subsection 3.2.1, if at any time (for purposes of this Subsection 3.2.1, the “acquisition time”) that occurs after the Effective Amendment Date a corporation or other entity (for purposes of this Subsection 3.2.1, the “selling company”) either (i) becomes part of an Affiliated Employer by reason of its stock or interests being purchased by an Affiliated Employer, (ii) has substantially all of the assets of one or more of its trades or businesses acquired by an Affiliated Employer, or (iii) has a facility, leased department, or other specific function it previously operated acquired or otherwise assumed by an Affiliated Employer (with, for purposes of this Subsection 3.2.1, each of the events described in clauses (i), (ii), and (iii) herein referred to as an “acquisition”), then any person who is classified by the selling company as an employee of the selling company immediately prior to the acquisition time (for purposes of this Subsection 3.2.1, an “acquisition employee”) and who at the acquisition time becomes an employee of an Affiliated Employer in connection with the acquisition shall have his or her years of service with the selling company prior to the acquisition time (for purposes of this Subsection 3.2.1, “pre-acquisition years”) be considered years of Eligibility Service and Vesting Service of the acquisition employee under this Plan if they would have been so considered under

 

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Subsection 3.1.2 or 3.1.7 above (as appropriate) had such pre-acquisition years been completed with an Affiliated Employer and if (but only if) either (i) Macy’s provides, by appropriate corporate action exercised in a uniform and nondiscriminatory manner, that any such pre-acquisition years of the acquisition employee shall be credited as Eligibility Service and/or Vesting Service of the acquisition employee under this Plan or (ii) the agreements by which the acquisition is effected by an Affiliated Employer indicate that any such pre-acquisition years of the acquisition employee shall be credited as Eligibility Service and/or Vesting Service of the acquisition employee.

3.2.2 In addition, any period of service of an Employee with the armed forces of the United States shall be credited as Eligibility Service and/or Vesting Service to the extent required by Federal law.

 

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ARTICLE 4

ELIGIBILITY AND PARTICIPATION

4.1 Eligibility for Participation . Persons shall remain or become Participants in the Plan only in accordance with the following subsections of this Section 4.1.

4.1.1 Any person who was a participant in a Prior Plan immediately prior to the Effective Amendment Date, and who either is an Employee as of the Effective Amendment Date or still has an unpaid and nonforfeited interest under the Plan as of the Effective Amendment Date, shall be a Participant in this Plan as of the Effective Amendment Date.

4.1.2 Further, each other person who, as of any Entry Date which occurs on or after the Effective Amendment Date, (i) has completed at least one year of Eligibility Service, (ii) has attained at least age 21, and (iii) is a Covered Employee shall become a Participant as of such Entry Date. Notwithstanding the foregoing, if a person would become a Participant as of any Entry Date under the foregoing provisions of this Subsection 4.1.2 but for the fact he or she is not a Covered Employee, and he or she subsequently becomes a Covered Employee, such person shall be deemed a Participant in the Plan on the date he or she so subsequently becomes a Covered Employee.

4.2 Entry Date . For purposes of the Plan and Section 4.1 above in particular, an “Entry Date” means the first day of any calendar month.

4.3 Duration of Participation . Each Participant in the Plan shall continue to be a Participant until both he or she has ceased to be an Employee and he or she has ceased to have any right to a benefit under the Plan.

4.4 Reinstatement of Participation . Any person who ceases to be a Participant, but who is thereafter reemployed as a Covered Employee by the Employer, shall be reinstated as a Participant as of the date on which he or she next completes an Hour of Service as a Covered Employee on or after such reemployment.

 

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ARTICLE 5

CASH BALANCE ACCOUNT

5.1 General Rules for Cash Balance Account .

5.1.1 The Committee shall establish a bookkeeping account, known as a “Cash Balance Account” in this Plan, with respect to each person who is an Active Participant in this Plan on or after the Effective Amendment Date. The monthly or lump sum amount of a Participant’s retirement benefit under the subsequent provisions of this Plan, if any, is generally determined on the basis of the dollar amount credited to the Participant’s Cash Balance Account as of the last day of the latest month which ends prior to the date as of which such benefit is paid or commences to be paid to the Participant.

5.1.2 For purposes of this Plan, the dollar amount which is credited to a Participant’s Cash Balance Account as of any date shall be deemed to refer to the net sum of the amounts which are credited to or subtracted from the Participant’s Cash Balance Account on or prior to such date under the subsequent provisions of this Plan.

5.1.3 Further, a Participant’s Cash Balance Account does not represent an actual funded account under which the Participant has a specific right to assets under the Trust or an account which reflects a specific part of the Trust; instead, it represents only a bookkeeping account to which bookkeeping amounts are credited and which is used only to determine the amount of the Participant’s retirement benefit, if any exists under the Plan.

5.1.4 The Cash Balance Account of a Participant is credited with, and only with, (i) an initial balance amount to the extent provided in Section 5.2 below, (ii) pay credit amounts to the extent provided in Section 5.3 below, and (iii) interest credit amounts to the extent provided in Section 5.4 below, and it shall be reduced to the extent required under the provisions of Section 5.5 below.

5.2 Initial Balance Amounts .

5.2.1 If a Participant actively participated in the Plan between January 1, 1997 and December 31, 2006 and had as of December 31, 2006 an amount credited to a Cash Balance Account that had been established under the Plan for him or her, then the Participant’s Cash Balance Account shall be credited on the Effective Amendment Date with an amount, called an “initial balance amount” in this Plan, equal to the amount credited to his or her Cash Balance Account under the Plan as of December 31, 2006 (under the terms of the Plan as then in effect).

5.3.2 In addition, if a Participant had not actively participated in the Plan between January 1, 1997 and December 31, 2006 but had participated in any Prior Plan described in Subsection 2.1.31(b)(2) through (7) above prior to January 1, 1997, if the Participant’s accrued benefit under any such Prior Plan has not commenced to be paid prior to the Effective Amendment Date, and if the Participant becomes an Active Participant in this Plan on or after the Effective Amendment Date, then the Participant’s Cash Balance Account shall be credited on the later of the Effective Amendment Date or the date he or she first becomes an Active Participant in this Plan on or after the Effective Amendment Date with an amount, also called an “initial balance amount” in this Plan, equal to the present value on such date of the sum

 

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of the Participant’s accrued benefits (which have not commenced to be paid) under the Prior Plans described in Subsection 2.1.31(b)(2) through (7) above. Such present value shall be determined (i) in accordance with the actuarial assumptions that would have been under the Prior Plan as in effect immediately prior to the Effective Amendment Date to determine such an initial balance amount, (ii) as if each such accrued benefit was payable in the form of Annuity under which the applicable Prior Plan’s accrued benefit was determined under such plan’s benefit formula terms, and (iii) as if such accrued benefit commenced as of the later of the Participant’s Normal Retirement Date or the date on which such initial balance amount is credited to the Participant’s Cash Balance Account.

5.3 Pay Credit Amounts .

5.3.1 A Participant’s Cash Balance Account shall be credited with a certain amount, called a “pay credit amount” in this Plan, for each Plan Year which meets all of the following conditions: (i) it is a Plan Year which begins on or after the Effective Amendment Date, (ii) it is a Plan Year for which the Participant is credited with a year of Vesting Service, (iii) it is a Plan Year in which the Participant is an Active Participant during at least part of such year, and (iv) it is a Plan Year for which the Participant has Covered Compensation.

5.3.2 Any pay credit amount to be credited to a Participant’s Cash Balance Account for a specific Plan Year under the provisions of Subsection 5.3.1 above shall be credited to such account as of the last day of such Plan Year (or, if the Participant receives or begins receiving a retirement benefit under the Plan as of a date during but prior to the last day of the Plan Year for which the pay credit amount is being credited, on the date as of which such benefit is paid or begins being paid under the Plan).

5.3.3 The pay credit amount which shall be credited to a Participant’s Cash Balance Account for any Plan Year (for which such an amount is required to be so credited under the provisions of Subsection 5.3.1 above) shall be determined from the following table (based on the Participant’s total number of years of Vesting Service credited to him or her at the start of such Plan Year and on his or her Covered Compensation for the period which begins on the first date in such Plan Year on which he or she is an Active Participant and ends on the date on which such pay credit amount is credited).

 

 

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5.4 Interest Credit Amounts .

5.4.1 The Cash Balance Account of each Participant shall be credited with a certain amount, called an “interest credit amount” in this Plan, for each calendar quarter which begins on or after the Effective Amendment Date, provided that such Cash Balance Account has a positive balance both at the start and at the end of such calendar quarter.

5.4.2 Except as is otherwise provided in the Plan, the interest credit amount to be credited to the Participant’s Cash Balance Account for any calendar quarter (for which such an amount is required to be so credited under the provisions of Subsection 5.4.1 above) shall be credited as of the last day of such calendar quarter and shall be equal to the amount of interest that would be generated by the dollar amount credited to the Participant’s Cash Balance Account as of the first day of such calendar quarter if such amount earned interest to the last day of such calendar quarter based on the greater of (i) the annual interest rate on 30-year U.S. Treasury securities for the second calendar month which precedes the start of the Plan Year during which such interest credit amount is credited or (ii) an interest rate equal to 5-1/4% per annum.

5.5 Reduction of Cash Balance Account . The entire amount credited to a Participant’s Cash Balance Account shall be reduced to zero on any date that a retirement benefit (or an additional amount of retirement benefit) is paid or begins to be paid to the Participant under the subsequent provisions of the Plan or on any date that the Participant’s entire interest under the Plan is forfeited under the subsequent provisions of the Plan.

 

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ARTICLE 6

RETIREMENT BENEFITS

6.1 Normal Retirement . A Participant who ceases to be an Employee (other than by reason of his or her death) after attaining his or her Normal Retirement Age, and within the calendar month in which he or she attains such age, shall be entitled to a retirement benefit under the Plan (unless he or she dies before the date as of which the benefit begins to be paid). Unless otherwise provided under or pursuant to the other provisions of the Plan, such retirement benefit shall: (i) commence as of the Participant’s Normal Retirement Date; (ii) be paid in the form of benefit determined under the provisions of Article 7 below; and (iii) provide, if the retirement benefit would be paid in the form of a Single Life Annuity which commences as of the Participant’s Normal Retirement Date, a monthly amount equal to the Participant’s Accrued Benefit Final Payment Amount determined as of the Participant’s Normal Retirement Date.

6.2 Late Retirement . A Participant who continues to be an Employee following the calendar month in which he or she first attains Normal Retirement Age shall be entitled to a retirement benefit under the Plan (unless he or she dies before the commencement date as of which the benefit begins to be paid). Unless otherwise provided under or pursuant to the other provisions of the Plan, such retirement benefit shall: (i) commence as of the earlier of (A) the first day of the first month which begins on or after the date the Participant ceases to be an Employee or (B) the Participant’s Required Commencement Date; (ii) be paid in the form of benefit determined under the provisions of Article 7 below; and (iii) provide, if the retirement benefit would be paid in the form of a Single Life Annuity which commences as of the earlier of the dates set forth in clause (i) above, a monthly amount equal to the Participant’s Accrued Benefit Final Payment Amount determined as of the date as of which such monthly retirement benefit is to commence.

6.3 Disability Retirement .

6.3.1 A Participant who ceases to be an Employee by reason of his or her total disability prior to his or her Normal Retirement Date shall be entitled to a retirement benefit under the Plan (unless he or she dies, or ceases to be totally disabled under the provisions of Subsection 6.3.4 below, before the date as of which the benefit begins to be paid). Unless otherwise provided under or pursuant to the other provisions of the Plan, such retirement benefit shall: (i) commence as of the Participant’s Normal Retirement Date; (ii) be paid in the form of benefit determined under the provisions of Article 7 below; and (iii) provide, if the retirement benefit would be paid in the form of a Single Life Annuity which commences as of the Participant’s Normal Retirement Date, a monthly amount equal to the Participant’s Accrued Benefit Final Payment Amount determined as of the Participant’s Normal Retirement Date.

6.3.2 For purposes of the Plan, “total disability” or “totally disabled” means or refers to, with respect to any Participant, the Participant’s permanent and continuous mental or physical inability by reason of injury, disease, or condition to meet the requirements of any employment for wage or profit. A Participant shall be deemed to be disabled for purposes of this Plan only when both of the following two requirements are met. First, a licensed physician or psychiatrist must provide to the Plan a written opinion that the Participant is totally disabled as that term is defined above. Second, the Participant must be eligible for and receive total disability benefits under Section 223 of the Federal Social Security Act, as amended, or any

 

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similar or subsequent section or act of like intent or purpose (unless the Committee determines, based on the written opinion of a licensed physician or psychiatrist provided the Committee pursuant to the immediately preceding sentence, that the Participant would be likely to qualify for such total disability benefits if he or she survived a sufficient amount of time to be processed for and receive such benefits but that he or she is also likely to die before he or she would otherwise be determined by the Social Security Administration or other applicable government agency to qualify for or to receive such benefits).

6.3.3 Further, and notwithstanding any other provision of the Plan, a Participant who becomes totally disabled for purposes of this Plan while an Employee shall be credited with a year of Vesting Service (as otherwise defined in Subsection 3.1.7 above) for each full or partial Plan Year included in the period from the date he or she becomes totally disabled and prior to the earlier of the date as of which his or her retirement benefit under the Plan commences (under Subsection 6.3.1 above or, if earlier, under Section 6.5 below) or his or her Normal Retirement Date; except that the Participant shall not be credited with a year of Vesting Service for a Plan Year under this Subsection 6.3.3 if he or she is credited with a year of Vesting Service for such Plan Year under the other provisions of this Plan. The Participant shall also be deemed to receive Compensation during each year of Vesting Service credited to the Participant under this Subsection 6.3.3 equal to the Compensation he or she received in the last full Plan Year which ended on or prior to the date he or she became totally disabled.

6.3.4 If a Participant who becomes totally disabled while an Employee has his or her Social Security disability benefit terminate (because he or she is no longer deemed by the Social Security Administration to be totally disabled) prior to the date as of which a disability retirement benefit under this Section 6.3 begins to be paid, then such Participant shall cease at that time to be considered totally disabled, shall cease at that time to accrue any additional years of Vesting Service under Subsection 6.3.3 above, and, solely for purposes of determining whether he or she is then entitled to a retirement benefit under Section 6.4 below, shall be considered to have ceased to be an Employee (for a reason other than total disability) at such time.

6.4 Vested Retirement .

6.4.1 A Participant who ceases to be an Employee (other than by reason of his or her death) prior to becoming eligible for any other type of retirement under the foregoing sections of this Article 6, but who is eligible to receive a vested retirement benefit pursuant to the provisions of Subsection 6.4.2 below, shall be entitled to a retirement benefit under the Plan (unless he or she dies before the date as of which the benefit begins to be paid). Unless otherwise provided under or pursuant to the other provisions of the Plan, such retirement benefit shall: (i) commence as of the Participant’s Normal Retirement Date; (ii) be paid in the form of benefit determined under the provisions of Article 7 below; and (iii) provide, if the retirement benefit would be paid in the form of a Single Life Annuity which commences as of the Participant’s Normal Retirement Date, a monthly amount equal to the Participant’s Accrued Benefit Final Payment Amount determined as of the Participant’s Normal Retirement Date.

6.4.2 A Participant shall be deemed eligible to receive a vested retirement benefit under this Section 6.4 if he or she ceases to be an Employee (other than by reason of his or her death) either: (i) after completing at least five years of Vesting Service (or, in the event that the Participant completes at least one Hour of Service on or after January 1, 2008 and

 

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effective on the first post-December 31, 2007 date on which the Participant so completes an Hour of Service, after completing at least three years of Vesting Service); or (ii) by reason of the closing or sale (not including the merger into any Employer or Affiliated Employer or into any division or facility of an Employer or Affiliated Employer) of any Employer (or any division or facility of an Employer) while he or she is employed by such Employer (or division or facility of such Employer).

6.5 Early Commencing Benefit Payments . Subject to the other provisions of this Plan (including but not limited to the following provisions of this Section 6.5 and the provisions of Sections 6.6, 7.2, and 7.4 below), a Participant who is eligible for a disability retirement benefit under Section 6.3 above or a Participant who is eligible for a vested retirement benefit under Section 6.4 above may (in either such case) elect, under procedures that are prescribed by the Committee, that his or her retirement benefit commence to be paid as of a commencement date that occurs prior to his or her Normal Retirement Date, provided that he or she makes at the same time an election of the form in which his or her retirement benefit is to be made pursuant to and in accordance with the requirements of Section 7.2 below (including the requirement that such election be made within an election period that complies with the provisions of Subsection 7.2.1 below).

6.5.1 If a Participant elects to begin his or her retirement benefit prior to his or her Normal Retirement Date under this Section 6.5, the commencement date of the Participant’s retirement date shall be set by the Committee and shall meet both of the following criteria: (i) such commencement date shall be the first day of a calendar month which begins both prior to the Participant’s Normal Retirement Date and on or after the date on which the Participant ceases to be an Employee; and (ii) such commencement date shall occur after, but no more than 180 days after, the date on which the latest written explanation as to the Participant’s benefit form options and other benefit payment rules described in Subsection 7.2.5 below is provided to the Participant (for purposes of this Subsection 6.5.1, the “written explanation date”). Notwithstanding the foregoing, such commencement date may be set by the Committee to occur prior to the date on which the Participant makes his or her election under this Section 6.5 only if the actual payment of the Participant’s retirement benefit begins to be paid within 180 days of the written explanation date (or if the actual payment of the Participant’s retirement benefit begins to be paid after the end of such 180-day period solely due to administrative reasons).

6.5.2 If a Participant elects to begin his or her retirement benefit prior to his or her Normal Retirement Date under this Section 6.5, then the date as of which such retirement benefit commences to the Participant shall be referred to in this Subsection 6.5.2 as his or her “earlier commencement date.” For purposes of this Plan and notwithstanding any other provisions contained in Section 6.3 or 6.4 above, if a Participant’s retirement benefit were to begin as of an earlier commencement date (by reason of the Participant’s election under this Section 6.5) and to be paid in the form of a Single Life Annuity (for purposes of this Subsection 6.5.2, the “early commencing Single Life Annuity”), then the monthly amount of the early commencing Single Life Annuity shall be equal to the Participant’s Accrued Benefit Final Payment Amount determined as of such earlier commencement date.

6.6 Late Benefit Election . Notwithstanding the foregoing provisions of this Article 6, if the date as of which any retirement benefit to which a Participant is entitled under this Plan is to commence under the sections of this Article 6 which precede this Section 6.6 would otherwise occur on or after the Participant’s Normal Retirement Date, then, notwithstanding any of the

 

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foregoing provisions of this Article 6, the date as of which such retirement benefit will commence shall be deferred to the extent necessary so that it is not prior to the date that is set by the Committee as the benefit’s commencement date that applies to the latest written explanation as to the Participant’s benefit form options and other benefit payment rules that is provided to the Participant under the provisions of Subsection 7.2.5 below.

6.6.1 The commencement date that is set by the Committee with respect to such latest written explanation shall meet all of the following criteria: (i) such commencement date shall be a first day of a month; (ii) such commencement date shall not be earlier than the earliest date on which such benefit can commence under the foregoing sections of this Article 6; and (iii) such commencement date shall occur after, but no more than 180 days after, the date on which such latest written explanation is provided to the Participant (for purposes of this Subsection 6.6.1, the “written explanation date”). Notwithstanding the foregoing, such commencement date may be set by the Committee to occur prior to the date on which the Participant makes an election of the form in which his or her retirement benefit is to be made pursuant to and in accordance with the requirements of Section 7.2 below only if the actual payment of the Participant’s retirement benefit begins to be paid within 180 days of the written explanation date (or if the actual payment of the Participant’s retirement benefit begins to be paid after the end of such 180-day period solely due to administrative reasons). In no event, however, notwithstanding any of the foregoing provisions of this Subsection 6.6.1, shall such commencement date occur later than as of the Participant’s Required Commencement Date.

6.6.2 If a Participant’s retirement benefit begins after the date as of which such benefit would otherwise commence under the sections of this Article 6 which precede this Section 6.6 (by reason of the provisions of this Section 6.6), then the date as of which such retirement benefit commences to the Participant shall be referred to in this Subsection 6.6.2 as his or her “later commencement date.” For purposes of the Plan and notwithstanding any other provisions contained in the Plan, if a Participant’s retirement benefit were to begin as of a later commencement date (by reason of the provisions of this Section 6.6) and to be paid in the form of a Single Life Annuity (for purposes of this Subsection 6.6.2, the “late commencing Single Life Annuity”), then the monthly amount of the late commencing Single Life Annuity shall be equal to the Participant’s Accrued Benefit Final Payment Amount determined as of such later commencement date.

6.7 Required Commencement of Benefits Under Section 401(a)(14) of Code . Pursuant to Section 401(a)(14) of the Code and Treasury Regulations Section 1.401(a)-14(a), any retirement benefit which is to be paid to a Participant under the other provisions of the Plan must begin to be paid to the Participant (provided he or she survives to the date as of which his or her benefit commences to be paid) as of a date which is not later than the 60th day after the close of the Plan Year in which the latest of the following events occurs: (i) the attainment by the Participant of age 65 (which is his or her earliest possible Normal Retirement Age under the Plan); (ii) the tenth annual anniversary of the date on which the Participant commenced his or her participation in the Plan; or (iii) the Participant’s ceasing to be an Employee. Notwithstanding the preceding sentence, the Plan may require, as an administrative convenience, that the Participant properly complete and file a claim for his or her benefit before the payment of the benefit commences. Also, by reason of Section 401(a)(9) of the Code, in no event shall the Participant’s retirement benefit commence later than as of his or her Required Commencement Date.

 

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6.8 Other Cessation of Employment . Except as otherwise provided in Article 8 below, if a Participant dies prior to the date as of which any retirement benefit to which he or she is entitled under any of the provisions of this Plan is to begin to be paid, or if the Participant ceases to be an Employee for any reason at a time when he or she is not entitled to a retirement benefit under any provision of the Plan, neither he or she nor any person claiming by or through him or her shall be entitled to receive a benefit under the Plan. In such case, his or her prior interest under this Plan (including his or her prior interest in any benefit otherwise determined for him or her under the Plan) shall be forfeited pursuant to the provisions of Section 10.8 below.

 

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ARTICLE 7

FORM OF RETIREMENT BENEFITS

7.1 Normal Form of Benefit .

7.1.1 Subject to the other terms of the Plan (including but not limited to the provisions of Sections 7.2 and 7.4 below), if a Participant is not married as of the date a retirement benefit under the Plan commences to be paid to him or her, such retirement benefit shall be paid in the form of a Single Life Annuity.

7.1.2 Subject to the other terms of the Plan (including but not limited to the provisions of Sections 7.2 and 7.4 below), if a Participant is married as of the date a retirement benefit under the Plan commences to be paid to him or her, such retirement benefit shall be paid in the form of a Qualified Joint and Survivor Annuity. In such case, the monthly amount payable to the Participant during his or her life under such Qualified Joint and Survivor Annuity shall be equal to the monthly amount which makes such Qualified Joint and Survivor Annuity actuarially equivalent to the Participant’s retirement benefit if it was paid in a Single Life Annuity form beginning as of the same commencement date as applies to such Qualified Joint and Survivor Annuity.

7.1.3 The date any retirement benefit, if paid in the normal form under this Section 7.1, shall commence is determined under the provisions of Article 6 above.

7.2 Election of Form of Benefit .

7.2.1 A Participant entitled to a retirement benefit under the Plan may elect, under procedures that are prescribed by the Committee, to choose to receive his or her retirement benefit in the normal form that otherwise applies to him or her under Section 7.1 above or to waive such normal form and instead to have such benefit paid in any specific optional form permitted him or her under Section 7.3 below (including the naming of any beneficiary, and/or class of beneficiaries or contingent beneficiaries, appropriate to such optional form). The period in which the Participant may make such election (and within which such election can be put into effect if administratively possible) shall be a period that is set by the Committee to end within a reasonable number of days or months after the latest written explanation as to the Participant’s benefit form options and other benefit payment rules that is provided to the Participant under the provisions of Subsection 7.2.5 below is so provided and which, except as is otherwise provided below, (i) shall not begin more than 180 days before the date as of which such benefit commences and (ii) shall not end prior to the expiration of the 30-day period beginning on the date that immediately follows the date on which such latest written explanation is provided to the Participant; except that, if the conditions of Subsection 7.2.6 below are met with respect to the Participant’s benefit, the Participant may elect to waive the 30-day requirement set forth above.

7.2.2 In addition, and notwithstanding the provisions of Subsection 7.2.1 above, a Participant who is married on the date as of which his or her retirement benefit commences may not have his or her election to receive his or her retirement benefit under the Plan in any optional form permitted him or her under Section 7.3 below (including the naming of any beneficiary, and/or class of beneficiaries or contingent beneficiaries, appropriate to such optional form) become effective unless the person who is then the spouse of the Participant consents,

 

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under procedures that are prescribed by the Committee, to such election within the same period in which the Participant has to make his or her election, with the spouse’s consent acknowledging the effect of such consent and being witnessed by a notary public. Any such spouse’s consent shall be irrevocable once received by a Plan representative.

7.2.3 Notwithstanding the provisions of Subsection 7.2.2 above, a consent of a spouse shall not be required for purposes of Subsection 7.2.2 above if it is established to the satisfaction of a Plan representative that the otherwise required consent cannot be obtained because no spouse exists, because the spouse cannot reasonably be located, or because of such other circumstances as the Secretary of the Treasury or his or her delegate allows in regulations.

7.2.4 A Participant may amend or revoke his or her election of a form of payment under Subsection 7.2.1 above, under procedures that are prescribed by the Committee, at any time during the period in which he or she has to elect a form for his or her retirement benefit; provided that if the Participant attempts upon such an amendment to elect another form of payment different from the normal form applicable to him or her under the provisions of Section 7.1 above, the conditions of Subsections 7.2.1 through 7.2.3 above, including any requirements that the new optional form and new beneficiary (if applicable) be named in the election and that spousal consent for the new benefit form and beneficiary (if applicable) be obtained, must be satisfied as if such amendment were a new election.

7.2.5 The Committee shall provide each Participant who is entitled to a retirement benefit under the Plan a written explanation of: (i) a description of each available form of benefit in which the Participant’s retirement benefit can be paid; (ii) a description of the eligibility conditions and any other material features of each such form of benefit; and (iii) any other items required to be contained in such explanation by regulations issued by the Secretary of the Treasury or his or her delegate, including, when and to the extent required by Treasury regulations and guidance, a description of the financial effect of electing any available form of benefit and the relative value of each optional form of benefit compared to the normal form in which the Participant’s benefit will be paid in the absence of the Participant electing out of such form (or, to the extent permitted by Treasury regulations, compared to a different form of benefit). In addition, the following paragraphs of this Subsection 7.2.5 shall also apply to such written explanation.

(a) Such written explanation shall be provided to the Participant at any time deemed appropriate by the Committee and in any event: (i) within a reasonable administrative period after the Participant notifies the Committee that he or she desires to commence payment of his or her retirement benefit within a reasonably short period (if he or she is then eligible, or if it is anticipated that he or she will soon be eligible, to commence such benefit); and (ii) to the extent the Participant has not yet elected the form in which his or her retirement benefit is to be paid, within a reasonable administrative period prior to his or her Required Commencement Date.

(b) For purposes of this Plan, the Committee shall be deemed to have provided the Participant with such written explanation on the date such written explanation either (i) is personally delivered to the Participant, (ii) is addressed to the Participant and deposited in the mail (first class or certified mail, postage prepaid) by the Committee or a Plan representative, or (iii) is provided in such other manner as is permitted by Treasury regulations.

 

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7.2.6 A claim of a Participant for his or her retirement benefit and the Participant’s election of the form in which his or her retirement benefit is to be made may be made and put into effect less than 30 days after the latest written explanation as to the Participant’s benefit form options and other benefit rules that is provided to the Participant under the provisions of Subsection 7.2.5 above is so provided, so long as all of the requirements set forth in the following paragraphs of this Subsection 7.2.6 are met.

(a) Such latest written explanation clearly indicates that the Participant has a right to at least 30 days to consider the form in which his or her retirement benefit will be paid and elect a permitted form of benefit.

(b) The Participant affirmatively elects the form in which he or she wants his or her retirement benefit to be paid prior to the expiration of the 30-day period beginning on the date that immediately follows the date on which such latest written explanation is provided to him or her.

(c) The Participant is permitted to revoke an affirmative election he or she makes for payment of his or her benefit in any form at least until the later of the date as of which the Participant’s retirement benefit under the Plan will commence based on such election or the expiration of the seven-day period that begins on the date that immediately follows the date on which such latest written explanation is provided to the Participant.

(d) The actual distribution of the retirement benefit in accordance with the Participant’s affirmative election does not begin before the expiration of the seven-day period that begins on the date that immediately follows the date on which such latest written explanation is provided to the Participant.

7.3 Optional Benefit Forms .

7.3.1 A Participant entitled to a retirement benefit under the Plan may elect to receive such benefit, in lieu of the normal form of benefit otherwise payable under Section 7.1 above and provided all of the election provisions of Section 7.2 above are met, in any of the following optional forms: (i) a Single Life Annuity (which is an optional form only for a Participant who is married as of the date a retirement benefit commences to be paid to him or her); (ii) a Life and Five Year Certain Annuity; (iii) a Life and Ten Year Certain Annuity; (iv) a Life and Twenty Year Certain Annuity; (v) a Joint and Survivor Annuity; (vi) a Social Security Leveling Annuity; or (vii) a lump sum cash payment.

7.3.2 If a Participant’s retirement benefit is to be paid in an optional form, the date as of which such retirement benefit shall commence shall be the same as the date determined under Article 6 above to be the date as of which such benefit shall commence.

7.3.3 Except as may otherwise be provided in the Plan, if an optional Annuity form of benefit (other than a Single Life Annuity) is elected by any Participant for his or her retirement benefit under the Plan, then the monthly amount of such optional form shall be equal to the amount which makes such optional Annuity form actuarially equivalent to the Participant’s retirement benefit if it was paid in a Single Life Annuity form beginning as of the same date as of which the optional Annuity form begins to be paid.

 

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7.3.4 Except as may otherwise be provided in the Plan, if an optional lump sum payment form of benefit is elected by any Participant for his or her retirement benefit under the Plan, then the lump sum amount of such optional form shall be equal to the greater of: (i) the lump sum amount that as of the commencement date of such benefit is actuarially equivalent (determined pursuant to the provisions of Subsection 10.5.3 below) to the Participant’s retirement benefit under the Plan had such benefit been paid in the form of a Single Life Annuity that commenced as of the later of the Participant’s Normal Retirement Date or the commencement date of the Participant’s retirement benefit and that had a monthly amount equal to the Participant’s Accrued Benefit determined as of the commencement date of the Participant’s retirement benefit; or (ii) the amount credited to the Participant’s Cash Balance Account as of the commencement date of the Participant’s retirement benefit.

7.3.5 Notwithstanding any other provision of this Plan to the contrary, any payment of a retirement benefit in an optional form must meet and be in accordance with the distribution requirements of Section 401(a)(9) of the Code, including the incidental death benefit requirements which are referred to in such section, and such section is hereby incorporated by reference into this Plan.

7.4 Automatic Lump Sum Payment .

7.4.1 Notwithstanding any other provision of the Plan to the contrary, if a retirement benefit payable under the Plan to a Participant has a present value of $1,000 or less as of such benefit’s distribution date (or $5,000 or less as of such distribution date when such date occurs prior to March 28, 2005), then such retirement benefit shall be converted to and paid as a lump sum cash payment as of such benefit’s distribution date (with the amount of such payment equal to the present value of such benefit as of such date). The provisions of this Subsection 7.4.1 shall not only be effective as of the Effective Amendment Date but shall also, for each Prior Plan that was in effect on March 28, 2005, be effective as of March 28, 2005 with respect to any benefit that commences to be paid on or after such date.

7.4.2 For purposes of this Section 7.4, the “distribution date” of a Participant’s retirement benefit under the Plan means the date as of which the lump sum payment amount of such benefit is determined by a Plan representative under its administrative processes, which date (i) shall be the first day of a calendar month, (ii) shall occur on or after the date on which the Participant ceases to be an Employee and no more than 90 days before the first date on which the Plan representative is in a position administratively to have the Plan actually distribute such benefit to the Participant ( e.g. , after calculating the lump sum payment amount of such benefit, confirming the Participant’s ceasing to be an Employee and his or her address, and meeting all requirements set forth in the other provisions of the Plan as to providing the Participant an opportunity to elect a direct rollover of such benefit to the extent a direct rollover of such benefit is permitted under the Code), and (iii) shall in no event occur later than the Participant’s Required Commencement Date.

7.4.3 For purposes of this Section 7.4 and except as may otherwise be provided in the Plan, the present value of a Participant’s retirement benefit as of any date shall be deemed to be equal to the greater of: (i) the lump sum amount that as of such benefit’s determination date is actuarially equivalent (determined pursuant to the provisions of Subsection 10.5.3 below) to the Participant’s retirement benefit under the Plan had such benefit been paid in the form of a Single Life Annuity that commenced as of the later of the Participant’s Normal Retirement Date

 

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or the commencement date of the Participant’s retirement benefit and that had a monthly amount equal to the Participant’s Accrued Benefit determined as of such benefit’s determination date; or (ii) the amount credited to the Participant’s Cash Balance Account as of such benefit’s determination date.

7.5 Transition Benefits .

7.5.1 Notwithstanding any other provision of the Plan to the contrary, if as of December 31, 1996 the Participant had accrued any benefit under one or more of the Prior Plans described in Subsection 2.1.31(b)(2) through (7) above, then the amount of the Participant’s retirement benefit under the Plan, when determined with respect to any form of benefit and commencement date permitted under the Plan, shall be deemed not to be less than the amount of the Participant’s benefit that would apply under the terms of such Prior Plans as in effect on December 31, 1996 (including such plans’ terms as to actuarial assumptions) if the Participant had permanently ceased to be an Employee no later than December 31, 1996.

7.5.2 Notwithstanding any other provision of the Plan to the contrary, if as of July 31, 2006 a person had accrued any benefit under the Prior Plan described in Subsection 2.1.31(b)(8) above (which Prior Plan merged into the Plan as of such date and the benefits of which Prior Plan had previously been frozen) and such benefit had not been completely paid by the Effective Amendment Date, then (i) any benefit to which the person is entitled (or any death benefit to which such person’s spouse or other beneficiary becomes entitled) under the terms of such Prior Plan as in effect on July 31, 2006 shall be payable under this Plan in accordance with such Prior Plan’s terms (including all such terms that determine the amount, form, and commencement date of the benefit’s payment, but as such terms are expressly modified by the terms of Articles 2 through 18 of this Plan) and (ii) any benefit that the person may accrue under this Plan (other than through the terms of such Prior Plan) shall be in addition to the benefit applicable to him or her that is described in clause (i) above and shall be payable under and subject to all of the terms of this Plan (without regard to the terms of such Prior Plan).

7.5.3 Further, and also notwithstanding any other provision of the Plan to the contrary, if (i) any Participant who was a participant (and was continuing to accrue benefits) on December 31, 1996 in one or more of the Prior Plans described in Subsection 2.1.31(b)(2) through (7) above ceases to be an Employee, (ii) such Participant both attained age 55 and completed at least ten years of Vesting Service by January 1, 2002, (iii) such Participant becomes entitled to receive a retirement benefit under this Plan, and (iv) such retirement benefit is to be paid under the terms of this Plan in any benefit form which was permitted as a benefit form, and to commence as of any date which was permitted to be a benefit’s commencement date, for the transition benefit described in Section 6.5.2 of the Plan as it was in effect as of December 31, 2006, then the amount of each payment of such retirement benefit shall not in any event be less than the amount which would have applied to such retirement benefit under the terms of such Prior Plans as in effect on December 31, 1996 (including such plans’ terms as to actuarial assumptions) if the terms of such Prior Plans as in effect on such date had continued to be in effect through the date the Participant ceases to be an Employee (except that the Participant’s compensation for any period occurring after December 31, 1996 which is taken into account under such Prior Plans’ terms shall be determined under the provisions of Subsection 2.1.10 above instead of such Prior Plans’ terms which define compensation).

 

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7.6 Effect on Retirement Benefit of Reemployment Prior to Required Commencement Date .

7.6.1 Subject to the other provisions of this Section 7.6, if a Participant ceases to be an Employee, thereby becomes entitled to the distribution of a retirement benefit that is attributable to his or her service with the Employer prior to such ceasing to be an Employee under the other provisions of this Plan (for purposes of this Subsection 7.6.1, the Participant’s “prior retirement benefit”), and is later reemployed as an Employee prior to his or her Required Commencement Date, then the distribution of the Participant’s prior retirement benefit (i) shall not begin to be paid at all by reason of such prior ceasing to be an Employee until the earlier of the Participant’s subsequent ceasing to be an Employee or his or her Required Commencement Date if payment of it has not begun by the time the Participant is reemployed as an Employee (and can be stopped from beginning by the Committee, under reasonable administrative procedures of the Committee, before any part of it begins to be paid) or (ii) shall, if it otherwise has begun to be paid or been paid in its entirety under the other provisions of the Plan prior to his or her reemployment as an Employee or in any event is not stopped from beginning by the Committee before any part of it begins to be paid prior to the earlier of the Participant’s subsequent ceasing to be an Employee or his or her Required Commencement Date, not be suspended (or adjusted in amount or form) merely by reason of such reemployment.

(a) If the Participant’s prior retirement benefit begins to be paid or is paid in its entirety prior to the earlier of the Participant’s subsequent ceasing to be an Employee or his or her Required Commencement Date and thus is not suspended under the foregoing provisions of this Subsection 7.6.1, then, as of the earlier of (i) the first day of the first calendar month which begins after the next date after his or her reemployment that the Participant again ceases to be an Employee or (ii) his or her Required Commencement Date, the Participant may also be entitled to an additional retirement benefit, to be determined in accordance with paragraph (b) below, in addition to the prior retirement benefit which he or she is then receiving or has received.

(b) If the Participant may be entitled to an additional retirement benefit by reason of the foregoing provisions of this Subsection 7.6.1, then:

(1) if the Participant’s prior retirement benefit is being paid in the form of any Annuity that commenced to be paid as of any date that was on or after the Participant’s Normal Retirement Date or if the earlier of the first day of the first calendar month which begins after the next date after his or her reemployment that the Participant again ceases to be an Employee or his or her Required Commencement Date occurred before August 1, 2004, the Participant’s additional retirement benefit shall be paid as part of the form of Annuity in which the Participant’s prior retirement benefit is being paid and shall commence to be paid in such Annuity form as of the earlier of the first day of the first calendar month which begins after the next date after his or her reemployment that the Participant again ceases to be an Employee or his or her Required Commencement Date; or

(2) if the Participant’s prior retirement benefit was paid in the form of a lump sum cash payment or if both the Participant’s prior retirement benefit is being paid in the form of any Annuity that commenced to be paid as of any date that was prior to the Participant’s Normal Retirement Date and the earlier of the first day of the first calendar month which begins after the next date after his or her reemployment that the Participant again ceases to

 

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be an Employee or his or her Required Commencement Date occurs or occurred on or after August 1, 2004, the form and commencement date of his or her additional retirement benefit shall be determined under the provisions of Article 6 above and the foregoing provisions of this Article 7 as if no prior retirement benefit had begun being paid to him or her.

Further, the monthly amount of the Participant’s additional retirement benefit (if such benefit is paid in the form of any type of Annuity) or the lump sum amount of the Participant’s additional retirement benefit (if such benefit is paid in the form of a lump sum cash payment) shall be equal to the monthly amount or lump sum amount (as applicable) of the retirement benefit that would be applicable to the Participant under the Plan (i) if it was payable in the same form as the Participant’s additional retirement benefit is to be paid, (ii) if it began to be paid or was paid in its entirety as of the commencement date which is determined in accordance with the foregoing provisions of this paragraph (b), and (iii) if it was determined under the other provisions of the Plan as of such commencement date but as if the monthly amount or lump sum amount (as applicable) of such additional retirement benefit was equal to what such monthly amount or lump sum amount (as applicable) would be as of such commencement date under the Plan if any service for which a benefit had been calculated in determining the monthly amount or lump sum amount (as applicable) of the Participant’s prior retirement benefit were disregarded.

7.6.2 Notwithstanding the provisions of Subsection 7.6.1 above, if a Participant ceases to be an Employee, starts to receive a retirement benefit that is attributable to his or her service with the Employer prior to such ceasing to be an Employee under the other provisions of the Plan (for purposes of this Subsection 7.6.2, the Participant’s “prior retirement benefit”) in the form of any type of Annuity, and is reemployed as an Employee prior to his or her Required Commencement Date, the Participant may elect in a writing to a Plan representative to suspend the distribution of his or her prior retirement benefit until he or she subsequently ceases to be an Employee (or, if earlier, his or her Required Commencement Date). In such case, the suspension shall begin with the payment otherwise due under the form in which the prior distribution is then being made which next follows the receipt by the Plan representative of such election.

(a) If the payment of a Participant’s prior retirement benefit is suspended pursuant to the foregoing provisions of this Subsection 7.6.2, then, as of the earlier of (i) the first day of the first calendar month which begins after the next date after he or she again ceases to be an Employee or (ii) his or her Required Commencement Date, the Participant’s suspended prior retirement benefit shall be redetermined in accordance with the following provisions of this paragraph (a). Such redetermined prior retirement benefit shall be paid in the same Annuity form as the Participant’s retirement benefit was being paid immediately prior to the earlier suspension and shall commence to be paid in such Annuity form as of the redetermination date. Further, the monthly amount of such redetermined retirement benefit shall be equal to the monthly amount of the retirement benefit that would be applicable to the Participant under the Plan (i) if it was payable in the same Annuity form as the Participant’s prior retirement benefit was being paid immediately prior to the earlier suspension of such benefit, (ii) if it began to be paid as of the redetermination date (and as if no payments of the retirement benefit had been made to the Participant prior to the redetermination date), and (iii) if it was determined by multiplying the monthly amount described in subparagraph (1) by the fraction described in subparagraph (2), where subparagraphs (1) and (2) are as follows.

(1) The monthly amount described in this subparagraph (1) is equal to the monthly amount of the retirement benefit that would be applicable to the Participant

 

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if clauses (i) and (ii) of the third sentence of paragraph (a) immediately above applied to the determination of such benefit but if it also was determined under the other provisions of the Plan as of the redetermination date, as if the Participant had permanently ceased to be an Employee on his or her prior ceasing to be an Employee, and as if his or her prior retirement benefit had never begun being paid; and

(2) The fraction described in this subparagraph (2) is equal to a fraction (i) having a numerator equal to the monthly amount of the Participant’s prior retirement benefit as in effect immediately prior to the earlier suspension of such benefit and (ii) having a denominator equal to the monthly amount of the retirement benefit that would be applicable to the Participant under the Plan (i) if it was payable in the same Annuity form as the Participant’s prior retirement benefit was being paid immediately prior to the earlier suspension of such benefit, (ii) if it began to be paid as of the date as of which such earlier suspension went into effect, and (iii) if it was determined under the other provisions of the Plan as of the date as of which such earlier suspension went into effect, as if the Participant had permanently ceased to be an Employee on his or her prior ceasing to be an Employee, and as if his or her prior retirement benefit had never begun being paid.

(b) In addition, if the payment of a Participant’s prior retirement benefit is suspended pursuant to the provisions of paragraph (a) above, then, as of the earlier of (i) the first day of the first calendar month which begins after the next date after his or her reemployment that the Participant again ceases to be an Employee or (ii) his or her Required Commencement Date, the Participant may also be entitled to an additional retirement benefit, to be determined in accordance with paragraph (c) below (in addition to the redetermined prior retirement benefit which he or she is entitled to receive under paragraph (a) above).

(c) If the Participant may be entitled to an additional retirement benefit by reason of the provisions of paragraph (b) above, then:

(1) if the Participant’s prior retirement benefit had initially commenced to be paid as of any date that was on or after the Participant’s Normal Retirement Date or if the earlier of the first day of the first calendar month which begins after the next date after his or her reemployment that the Participant again ceases to be an Employee or his or her Required Commencement Date occurred before August 1, 2004, the Participant’s additional retirement benefit shall be paid as part of the form of Annuity in which the Participant’s prior retirement benefit is being paid and shall commence to be paid in such Annuity form as of the earlier of the first day of the first calendar month which begins after the next date after his or her reemployment that the Participant again ceases to be an Employee or his or her Required Commencement Date; or

(2) if the Participant’s prior retirement benefit was paid in the form of a lump sum cash payment or if both the Participant’s prior retirement benefit had initially commenced to be paid as of any date that was prior to the Participant’s Normal Retirement Date and the earlier of the first day of the first calendar month which begins after the next date after his or her reemployment that the Participant again ceases to be an Employee or his or her Required Commencement Date occurs or occurred on or after August 1, 2004, the form and commencement date of his or her additional retirement benefit shall be determined under the provisions of Article 6 above and the foregoing provisions of this Article 7 as if no prior retirement benefit had begun being paid to him or her.

 

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Further, the monthly amount of the Participant’s additional retirement benefit (if such benefit is paid in the form of any type of Annuity) or the lump sum amount of the Participant’s additional retirement benefit (if such benefit is paid in the form of a lump sum cash payment) shall be equal to the monthly amount or lump sum amount (as applicable) of the retirement benefit that would be applicable to the Participant under the Plan (i) if it was payable in the same form as the Participant’s additional retirement benefit is to be paid, (ii) if it began to be paid or was paid in its entirety as of the commencement date which is determined in accordance with the foregoing provisions of this paragraph (c), and (iii) if it was determined under the other provisions of the Plan as of such commencement date but as if the monthly amount or lump sum amount (as applicable) of such additional retirement benefit was equal to what such monthly amount or lump sum amount (as applicable) would be as of such commencement date under the Plan if any service for which a benefit had been calculated in determining the monthly amount or lump sum amount (as applicable) of the Participant’s prior retirement benefit were disregarded.

7.7 Additional Accruals After Required Commencement Date .

7.7.1 Subject to the other provisions of this Section 7.7, if a Participant continues to be employed or is reemployed as an Employee after his or her Required Commencement Date, any prior distribution of the Participant’s retirement benefit that is attributable to his or her service with the Employer prior to his or her Required Commencement Date under the other provisions of the Plan (for purposes of this Section 7.7, the Participant’s “prior retirement benefit”) shall not be suspended or adjusted in amount or form merely by reason of such continued employment or reemployment. Effective as of the first day of any calendar month which occurs in the first Plan Year which begins after his or her Required Commencement Date and as of the first day of any calendar month which occurs in each subsequent Plan Year (the specific month in any such Plan Year to be chosen by the Committee on a nondiscriminatory basis), and as of any other date chosen by the Committee on a nondiscriminatory basis, the Participant may also be entitled to an additional retirement benefit, to be determined in accordance with Subsection 7.7.2 below, in addition to the prior retirement benefit which he or she is then receiving or has received.

7.7.2 If the Participant may be entitled to an additional retirement benefit by reason of the provisions of Subsection 7.7.1 above effective as of any date described in Subsection 7.7.1 above (for purposes of this Subsection 7.7.2, the “subject effective date”), then:

(a) if the Participant’s prior retirement benefit (or any additional retirement benefit of the Participant that was effective as of any date earlier than the subject effective date under the provisions of this Section 7.7) is being paid in the form of any Annuity that commenced to be paid as of any date that was on or after the Participant’s Normal Retirement Date or if the subject effective date occurred before August 1, 2004, the Participant’s additional retirement benefit shall be paid as part of the form of Annuity in which the Participant’s prior retirement benefit (or such additional retirement benefit of the Participant that was effective as of any date earlier than the subject effective date) is being paid and shall commence to be paid in such Annuity form as of the subject effective date; or

(b) if the Participant’s prior retirement benefit (and each and any additional retirement benefit of the Participant that was effective as of any date earlier than the subject effective date under the provisions of this Section 7.7) was paid in the form of a lump sum cash payment or if both the Participant’s prior retirement benefit is being paid in the form of

 

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any Annuity that commenced to be paid as of any date that was prior to the Participant’s Normal Retirement Date (and no additional retirement benefit of the Participant was effective as of any date earlier than the subject effective date under the provisions of this Section 7.7) and the subject effective date occurs or occurred on or after August 1, 2004, the form and commencement date of his or her additional retirement benefit shall be determined under the provisions of Article 6 above and the foregoing provisions of this Article 7 as if no prior retirement benefit had begun being paid to him or her.

Further, the monthly amount of the Participant’s additional retirement benefit (if such benefit is paid in the form of any type of Annuity) or the lump sum amount of the Participant’s additional retirement benefit (if such benefit is paid in the form of a lump sum cash payment) shall be equal to the monthly amount or lump sum amount (as applicable) of the retirement benefit that would be applicable to the Participant under the Plan (i) if it was payable in the same form as the Participant’s additional retirement benefit is to be paid, (ii) if it began to be paid or was paid in its entirety as of the subject effective date, and (iii) if it was determined under the other provisions of the Plan as of the subject effective date but as if the monthly amount or lump sum amount (as applicable) of such additional retirement benefit was equal to what such monthly amount or lump sum amount (as applicable) would be as of the subject effective date if any service for which a benefit had been calculated in determining the monthly amount or lump sum amount (as applicable) of the Participant’s prior retirement benefit were disregarded.

 

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ARTICLE 8

PRE-PENSION DEATH BENEFITS

8.1 Eligibility for Pre-Pension Death Benefit .

8.1.1 A death benefit, called the “Pre-Pension Death Benefit” in this Article 8, shall be paid to the Beneficiary of a Participant who dies while still an Employee (and prior to any retirement benefit beginning to be paid to him or her under the Plan).

8.1.2 In addition, a Pre-Pension Death Benefit shall also be paid to the Beneficiary of a Participant who dies after ceasing to be an Employee when he or she is entitled to a retirement benefit under Section 6.1, 6.2, 6.3, or 6.4 above but prior to the date as of which the retirement benefit to which he or she is entitled begins to be paid to him or her.

8.1.3 Except as may be provided in Subsections 8.1.1 and 8.1.2 above, no Pre-Pension Death Benefit (or any other death benefit) is payable under the Plan with respect to a Participant who dies prior to the date as of which any retirement benefit to which he or she has become entitled to under the Plan begins to be paid to him or her.

8.2 Beneficiary . For purposes of this Article 8, the “Beneficiary” of any Participant shall mean the person who is the Participant’s spouse at the time of the Participant’s death; except that, if it is established to the satisfaction of a Plan representative that the Participant is not survived by a spouse or such spouse cannot reasonably be located, the Participant’s “Beneficiary” shall be deemed to be the person or trust named by the Participant as his or her beneficiary for purposes of the Plan’s Pre-Pension Death Benefit in a Notice which is filed with a Plan representative prior to the Participant’s death. In addition, if the Committee determines that the Participant is not survived by a spouse or other properly designated beneficiary who can reasonably be located, the Participant’s “Beneficiary” shall be deemed to be the Participant’s estate.

8.3 Rules as to Pre-Pension Death Benefit if Beneficiary is Participant’s Spouse . If a Participant’s Beneficiary becomes entitled to a Pre-Pension Death Benefit under this Article 8 and such Beneficiary is the Participant’s surviving spouse, then the form, commencement date, and amount of such death benefit shall be determined in accordance with the following provisions of this Section 8.3.

8.3.1 Except as provided in Subsections 8.3.2 and 8.3.3 below, such death benefit shall be a monthly benefit which commences as of the day which would have been the Participant’s Normal Retirement Date had he or she survived (or, if such Participant dies after his or her Normal Retirement Date, the first day of the first calendar month which begins on or after the date of such Participant’s death). If such Participant dies before his or her Normal Retirement Date, however, the Participant’s surviving spouse may request, under procedures that are prescribed by the Committee, that such monthly death benefit commence to be paid prior to the day which would have been the Participant’s Normal Retirement Date had he or she survived, provided the spouse makes at the same time an election of the form in which such death benefit is to be made pursuant to and in accordance with the requirements of Subsection 8.3.2 below (including the requirement that such election be made within an election period that complies with the provisions of Subsection 8.3.2(a) below).

 

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(a) If the surviving spouse elects to begin payment of such death benefit prior to the day which would have been the Participant’s Normal Retirement Date had he or she survived, the commencement date of such death benefit shall be set by the Committee and shall meet both of the following criteria: (i) such commencement date shall be the first day of a calendar month which begins both prior to the day which would have been the Participant’s Normal Retirement Date had he or she survived and after the date on which the Participant dies; and (ii) such commencement date shall occur after, but no more than 180 days after, the date on which the latest written explanation as to the surviving spouse’s benefit form options and other benefit payment rules described in Subsection 8.3.2(c) below is provided to the surviving spouse (for purposes of this paragraph (a), the “written explanation date”). Notwithstanding the foregoing, such commencement date may be set by the Committee to occur prior to the date on which the surviving spouse makes his or her election under paragraph (a) above only if the actual payment of the death benefit begins to be paid within 180 days of the written explanation date (or if the actual payment of the spouse’s death benefit begins to be paid after the end of such 180-day period solely due to administrative reasons).

(b) Further, except as provided in Subsections 8.3.2 and 8.3.3 below, such death benefit shall be payable for the life of the Participant’s surviving spouse, ending with the monthly payment due for the month in which the spouse dies.

(c) In addition, except as provided in Subsections 8.3.2 and 8.3.3 below, the monthly amount of such death benefit shall be an amount which makes such death benefit actuarially equivalent to the monthly retirement benefit that would have been payable to the Participant under the terms of this Plan if (i) the Participant, if he or she had not yet ceased to be an Employee prior to his or her death, had ceased to be an Employee on the date of his or her death and (ii) the Participant had survived to the date as of which such death benefit commences and began receiving as of such date his or her retirement benefit under the Plan in the form of a Single Life Annuity.

8.3.2 Further, notwithstanding the provisions of Subsection 8.3.1 above, the Participant’s surviving spouse may elect, under procedures that are prescribed by the Committee, to choose to receive such death benefit in the form that otherwise applies to him or her under Subsection 8.3.1(b) above or to waive such form and instead to have such benefit paid in the form of a lump sum cash payment. If the surviving spouse’s death benefit is to be paid in an optional lump sum payment form, the date as of which such death benefit shall commence shall be the same as the date determined under Subsection 8.3.1 above to be the date as of which such benefit shall commence. The period in which the surviving spouse may make such election (and within which such election can be put into effect if administratively possible) shall be a period that is set by the Committee to end within a reasonable number of days or months after the latest written explanation as to the surviving spouse’s benefit form options and other benefit payment rules that is provided to the surviving spouse under the provisions of paragraph (b) below is so provided and which shall not begin more than 180 days before the date as of which such benefit commences.

(a) The Participant’s surviving spouse may amend or revoke the spouse’s election of a form of benefit for such death benefit, under procedures that are prescribed by the Committee, at any time during the period in which he or she has to elect a form for such death benefit.

 

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(b) The Committee shall provide the Participant’s surviving spouse a written explanation of (i) the terms and conditions of the monthly payment form in which such death benefit will be paid in the absence of the surviving spouse electing out of such form and the lump sum optional form available to the surviving spouse, (ii) the surviving spouse’s rights to make and the effect of an election out of the monthly payment form, (iii) the rights of the surviving spouse to revoke such an election out, and (iv) the commencement date of such death benefit that will apply to such written explanation in the event that the surviving spouse elects a form of benefit within the election period that is set by the Committee to run in relation to such written explanation. Such written explanation shall be provided to the surviving spouse within a reasonable administrative period after the surviving spouse notifies the Committee that he or she desires to commence payment of his or her benefit in a reasonably short period (if he or she is then eligible to commence such benefit) and, to the extent the surviving spouse has not yet elected the form in which his or her death benefit is to be paid, within a reasonable administrative period prior to the latest date as of which such benefit must commence under the other provisions of the Plan. For purposes of this Plan, the Committee shall be deemed to have provided the surviving spouse with such written explanation on the date such written explanation either is personally delivered or faxed to the surviving spouse, is deposited in the mail (first class or certified mail, postage prepaid) by the Committee or a Plan representative, or is otherwise distributed in a manner that would be permitted by Treasury regulations for a written benefit form explanation that is to be provided a Participant.

(c) If such death benefit is paid in a lump sum form pursuant to the surviving spouse’s election, then the lump sum payment of such death benefit shall be made as of the commencement date of such death benefit as determined under the provisions of Subsection 8.3.1 above. Further, the amount of such lump sum payment shall be equal to the lump sum amount that would make such death benefit actuarially equivalent to such death benefit if it were payable as of the same commencement date as of which the lump sum benefit is paid but as if it were payable in the form of benefit described in Subsection 8.3.1(b) above.

8.3.3 Also, notwithstanding any other provision of this Section 8.3 to the contrary but subject to paragraph (b) of this Subsection 8.3.3, if such death benefit has a present value of $5,000 or less as of such benefit’s distribution date, then such death benefit shall be converted to and paid as a lump sum cash payment as of such benefit’s distribution date (with the amount of such payment equal to the present value of such benefit as of such date).

(a) For purposes of this Subsection 8.3.3, the “distribution date” of a Participant’s surviving spouse’s death benefit under the Plan means the date as of which the lump sum payment amount of such benefit is determined by a Plan representative under its administrative processes, which date (i) shall be the first day of a calendar month, (ii) shall occur on or after the date of the Participant’s death and no more than 90 days before the first date on which the Plan representative is in a position administratively to have the Plan actually distribute such benefit to the Participant’s surviving spouse ( e.g. , after calculating the lump sum payment amount of such benefit, confirming the Participant’s death and the spouse’s address, and meeting all requirements set forth in the other provisions of the Plan as to providing the spouse an opportunity to elect a direct rollover of such benefit to the extent a direct rollover of such benefit is permitted under the Code), and (iii) shall in no event occur later than the last day of the calendar year that includes the fifth annual anniversary of the date of the Participant’s death.

 

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(b) For purposes of this Subsection 8.3.3, the present value of a death benefit payable under this Section 8.3 to a Participant’s surviving spouse as of any date shall be equal to the lump sum amount that would make such death benefit actuarially equivalent to such death benefit if it were payable as of the same commencement date as of which the lump sum benefit is paid but as if it were payable in the form of benefit described in Subsection 8.3.1(b) above.

8.4 Rules as to Pre-Pension Death Benefit if Beneficiary is Not Participant’s Spouse .

8.4.1 If a Participant’s Beneficiary becomes entitled to a Pre-Pension Death Benefit under this Article 8 and such Beneficiary is not the Participant’s surviving spouse, then such death benefit shall be paid in the form of a lump sum cash payment. Such lump sum payment shall be made as of such benefit’s distribution date (with the amount of such payment equal to the present value of such benefit as of such date).

8.4.2 For purposes of this Section 8.4, the “distribution date” of a Participant’s non-surviving spouse Beneficiary’s death benefit under the Plan means the date as of which the lump sum payment amount of such benefit is determined by a Plan representative under its administrative processes, which date (i) shall be the first day of a calendar month, (ii) shall occur on or after the date of the Participant’s death and no more than 90 days before the first date on which the Plan representative is in a position administratively to have the Plan actually distribute such benefit to the Participant’s Beneficiary ( e.g. , after calculating the lump sum payment amount of such benefit and confirming the Participant’s death and the Beneficiary’s address), and (iii) shall in no event occur later than the last day of the calendar year that includes the fifth annual anniversary of the date of the Participant’s death.

8.4.3 For purposes of this Section 8.4, the present value of the death benefit payable under this Section 8.4 to a Participant’s non-surviving spouse Beneficiary as of any date shall be equal to the lump sum amount that would have been payable to the Participant under the terms of this Plan if (i) the Participant, if he or she had not yet ceased to be an Employee prior to his or her death, had ceased to be an Employee on the date of his or her death, (ii) the Participant had survived to the date as of which such death benefit is paid and received as of such date his or her retirement benefit under the Plan in the form of a lump sum cash payment, and (iii) the Participant had not accrued any benefit prior to the Effective Amendment Date under the May Retirement Plan.

 

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ARTICLE 9

MAXIMUM RETIREMENT BENEFIT LIMITATIONS

9.1 Maximum Plan Benefit . The provisions of this Section 9.1 shall not only be effective as of the Effective Amendment Date but shall also, for each Prior Plan that was in effect on January 1, 2002, be effective as of January 1, 2002 with respect to any Plan Year beginning on or after such date.

9.1.1 General Rules . Subject to the other provisions of this Section 9.1 but notwithstanding any other provision of this Plan to the contrary, in no event, during any limitation year, shall the annual amount of a Participant’s retirement benefit accrued or payable at any time under this Plan, when expressed in the form of a Single Life Annuity and in accordance with the adjustments described in the following provisions of this Section 9.1, exceed the maximum permissible benefit. For purposes of this Section 9.1 and subject to the adjustments described in the following provisions of this Section 9.1, the “maximum permissible benefit” is the lesser of the defined benefit dollar limitation, as defined in paragraph (a) of this Subsection 9.1.1, or the defined benefit compensation limitation, as defined in paragraph (b) of this Subsection 9.1.1.

(a) Defined Benefit Dollar Limitation . For purposes of this Section 9.1, the “defined benefit dollar limitation” is $160,000, as adjusted, effective January 1 of each calendar year, under Section 415(d) of the Code in such manner as the Secretary of the Treasury or his or her delegate shall prescribe. A limitation as adjusted under Code Section 415(d) as of the January 1 of any calendar year shall apply to the limitation year ending with or within such calendar year.

(b) Defined Benefit Compensation Limitation . For purposes of this Section 9.1 and subject to subparagraphs (1) and (2) of this paragraph (b), the “defined benefit compensation limitation” is 100% of the Participant’s average annual compensation received during the three consecutive calendar years which produce the highest dollar result (or, for any limitation year prior to the limitation year that commences as of January 1, 2006, 100% of the Participant’s average annual compensation received during the three consecutive calendar years both during which he is a Participant in the Plan and which produce the highest dollar result).

(1) Notwithstanding the foregoing provisions of this paragraph (b), if the Participant is an Employee for less than three consecutive calendar years (or, for any limitation year prior to the limitation year that commences as of January 1, 2006, if the Participant is both an Employee and a Participant for less than three consecutive calendar years), the Participant’s “defined benefit compensation limitation” shall for purposes of this Section 9.1 be deemed to be the quotient obtained by dividing (i) the Participant’s compensation received during the Participant’s longest consecutive period of service as an Employee (or, for any limitation year prior to the limitation year that commences as of January 1, 2006, the Participant’s compensation received during the Participant’s longest consecutive period of service as both an Employee and a Participant) by (ii) the number of years in that period (including fractions of years, but not less than one year).

(2) For purposes of the foregoing provisions of this paragraph (b), if the Participant ceases to be an Employee and is subsequently rehired as an Employee, all

 

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years for which the Participant performs no services as an Employee and receives no compensation for his or her services as an Employee (for purposes of this subparagraph (2), the “break period”) shall be ignored in determining the Participant’s defined benefit compensation limitation and the year of service immediately prior to and the year of service immediately after the break period shall be treated as if they were consecutive.

9.1.2 Necessary Terms . For purposes of the restrictions and rules set forth in this Section 9.1, the following terms shall apply.

(a) A Participant’s “compensation” shall refer to his or her Compensation as defined in Subsection 2.1.10 above.

(b) The “limitation year” for purposes of the restrictions under this Section 9.1 shall be the calendar year.

9.1.3 Procedures for Applying Limitation . This Subsection 9.1.3 describes the adjustments that are made in a Participant’s retirement benefit accrued or payable under the Plan, in the defined benefit dollar limitation, and in the defined benefit compensation limitation when determining whether such retirement benefit meets the requirements of Subsection 9.1.1 above. For any limitation year, the Participant’s retirement benefit accrued or payable at any time under the Plan shall be limited to the extent necessary so that, if such limit would be deemed to have applied under the provisions of the Plan that do not include the provisions of this Section 9.1, the annual amount of the actual equivalent benefit-form Single Life Annuity determined in Step 1 below cannot and shall not exceed the lesser of the annual amount of the maximum equivalent age-adjusted Single Life Annuity determined in Step 2 below or the annual amount of the maximum equivalent compensation-adjusted Single Life Annuity determined in Step 3 below.

(a) Step 1 : This Step 1 determines the annual amount of a hypothetical Single Life Annuity that, if it were paid to the Participant and commenced as of the commencement date of the Participant’s actual retirement benefit under the Plan (for purposes of this Subsection 9.1.3, the “actual commencement date”), would have an annual amount calculated in accordance with subparagraphs (1), (2), and (3) of this paragraph (a). Such hypothetical Single Life Annuity is referred to in this Section 9.1 as the Participant’s “actual equivalent benefit-form Single Life Annuity.”

(1) When the form of the Participant’s actual retirement benefit under the Plan is a Single Life Annuity or a Qualified Joint and Survivor Annuity that commences as of the actual commencement date, then the annual amount of the actual equivalent benefit-form Single Life Annuity shall be equal to the annual amount that would apply to the Participant’s actual retirement benefit under the Plan if the provisions of this Section 9.1 were disregarded.

(2) When the form of the Participant’s actual retirement benefit under the Plan is an Annuity, other than a Single Life Annuity or a Qualified Joint and Survivor Annuity, that commences as of the actual commencement date, then the annual amount of the actual equivalent benefit-form Single Life Annuity shall be equal to the greater of:

(A) the annual amount of the Participant’s retirement benefit under the Plan that would apply if it was paid in the form of a Single Life Annuity that

 

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commences as of the actual commencement date and if the provisions of this Section 9.1 were disregarded; or

(B) the annual amount that would make the actual equivalent benefit-form Single Life Annuity actuarially equivalent to the Participant’s actual retirement benefit under the Plan (that is paid in the form of an Annuity, other than a Single Life Annuity or a Qualified Joint and Survivor Annuity, that commences as of the actual commencement date) if the provisions of this Section 9.1 did not apply and if the actuarial assumptions used to determine such actuarial equivalence were an interest rate assumption of 5% per annum and the applicable mortality assumption (as such term is defined in Subsection 9.1.4 below).

(3) When the form of the Participant’s actual retirement benefit under the Plan is a single sum payment that is made as of the actual commencement date, then the annual amount of the actual equivalent benefit-form Single Life Annuity shall be equal to the greatest of:

(A) the annual amount that would make the actual equivalent benefit-form Single Life Annuity actuarially equivalent to the Participant’s actual retirement benefit under the Plan (that is paid in the form of a single sum payment that is made as of the actual commencement date) if the provisions of this Section 9.1 did not apply and if the actuarial assumptions used to determine such actuarial equivalence were the combination of the interest rate assumption and the mortality assumption that is specified and would be used under the other provisions of the Plan for determining the actuarial equivalence of two benefits whose only difference is one is paid in the form of an Annuity and the other is paid in the form of a single sum payment;

(B) the annual amount that would make the actual equivalent benefit-form Single Life Annuity actuarially equivalent to the Participant’s actual retirement benefit under the Plan (that is paid in the form of a single sum payment that is made as of the actual commencement date) if the provisions of this Section 9.1 did not apply and if the actuarial assumptions used to determine such actuarial equivalence were the applicable interest rate and the applicable mortality assumption (as such terms are defined in Subsection 9.1.4 below). Notwithstanding the foregoing, the reference to “the applicable interest rate” in the immediately preceding sentence shall be deemed to be a reference to “an interest rate of 5.5% per annum” if the Participant’s actual retirement benefit under the Plan is paid in the form of a single sum payment as of any date that occurs during a Plan Year that begins on or after January 1, 2004; or

(C) if and only if the Participant’s actual retirement benefit under the Plan is paid in the form of a single sum payment as of any date that occurs during a Plan Year that begins on or after January 1, 2006, the quotient produced by dividing (i) the annual amount that would make the actual equivalent benefit-form Single Life Annuity actuarially equivalent to the Participant’s actual retirement benefit under the Plan (that is paid in the form of a single sum payment that is made as of the actual commencement date) if the provisions of this Section 9.1 did not apply and if the actuarial assumptions used to determine such actuarial equivalence were the applicable interest rate and the applicable mortality assumption (as such terms are defined in Subsection 9.1.4 below) by (ii) 1.05.

 

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(b) Step 2 : This Step 2 determines the annual amount of a hypothetical Single Life Annuity that, if it were paid to the Participant and commenced as of the actual commencement date, would have an annual amount calculated in accordance with subparagraphs (1), (2), and (3) of this paragraph (b). Such hypothetical Single Life Annuity is referred to in this Section 9.1 as the Participant’s “maximum equivalent age-adjusted Single Life Annuity.”

(1) If the actual commencement date occurs before the date the Participant first attains age 65 and on or after the date on which the Participant first attains age 62, then the annual amount of the maximum equivalent age-adjusted Single Life Annuity shall be equal to the defined benefit dollar limitation set forth in Subsection 9.1.1(a) above (as adjusted for the limitation year that includes the actual commencement date).

(2) If the actual commencement date occurs before the date on which the Participant first attains age 62, then the annual amount of the maximum equivalent age-adjusted Single Life Annuity shall be equal to the lesser of:

(A) the product obtained by multiplying (i) the defined benefit dollar limitation set forth in Subsection 9.1.1(a) above (as adjusted for the limitation year that includes the actual commencement date) by (ii) a fraction that has a numerator equal to the annual amount of the Participant’s actual retirement benefit under the Plan that would apply if it was paid in the form of a Single Life Annuity that commences as of the actual commencement date and if the provisions of this Section 9.1 were disregarded and a denominator equal to the annual amount of the Participant’s actual retirement benefit under the Plan that would apply if it was paid in the form of a Single Life Annuity that commences as of the first day of the first month that begins on or after the date on which the Participant first attains age 62 and if the provisions of this Section 9.1 were disregarded; or

(B) the annual amount that would make the maximum equivalent age-adjusted Single Life Annuity actuarially equivalent to a hypothetical retirement benefit that would apply to the Participant under the Plan if it was paid in the form of a Single Life Annuity that commences as of the first day of the first month that begins on or after the date on which the Participant first attains age 62, if its annual amount were the defined benefit dollar limitation set forth in Subsection 9.1.1(a) above (as adjusted for the limitation year that includes the actual commencement date), and if the actuarial assumptions used to determine such actuarial equivalence were an interest rate of 5% per annum and the applicable mortality assumption (as such term is defined in Subsection 9.1.4 below and applied by expressing the Participant’s age based on completed months as of the actual commencement date). Notwithstanding the foregoing provisions of this clause (B), the actuarial assumptions referred to in the immediately preceding sentence shall not reflect the probability of the Participant’s death between the actual commencement date and the first day of the first month that begins on or after the date on which the Participant first attains age 62.

(3) If the actual commencement date occurs after the date on which the Participant first attains age 65, then the annual amount of the maximum equivalent age-adjusted Single Life Annuity shall be equal to the lesser of:

(A) the product obtained by multiplying (i) the defined benefit dollar limitation set forth in Subsection 9.1.1(a) above (as adjusted for the limitation year

 

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that includes the actual commencement date) by (ii) a fraction that has a numerator equal to the annual amount of the Participant’s actual retirement benefit under the Plan that would apply if the Participant permanently ceased to be an Employee when he or she first attained age 65, if it was paid in the form of a Single Life Annuity that commences as of the actual commencement date, and if the provisions of this Section 9.1 were disregarded and a denominator equal to the annual amount of the Participant’s actual retirement benefit under the Plan that would apply if the Participant permanently ceased to be an Employee when he or she first attained age 65, if it was paid in the form of a Single Life Annuity that commences as of the first day of the first month that begins on or after the date on which the Participant first attains age 65, and if the provisions of this Section 9.1 were disregarded; or

(B) the annual amount that would make the maximum equivalent age-adjusted Single Life Annuity actuarially equivalent to a hypothetical retirement benefit that would apply to the Participant under the Plan if it was paid in the form of a Single Life Annuity that commences as of the first day of the first month that begins on or after the date on which the Participant first attains age 65, if its annual amount were the defined benefit dollar limitation set forth in Subsection 9.1.1(a) above (as adjusted for the limitation year that includes the actual commencement date), and if the actuarial assumptions used to determine such actuarial equivalence were an interest rate of 5% per annum and the applicable mortality assumption (as such term is defined in Subsection 9.1.4 below and applied by expressing the Participant’s age based on completed months as of the actual commencement date). Notwithstanding the foregoing provisions of this clause (B), the actuarial assumptions referred to in the immediately preceding sentence shall not reflect the probability of the Participant’s death between the first day of the first month that begins on or after the date on which the Participant first attains age 65 and the actual commencement date.

(c) Step 3 : This Step 3 determines the annual amount of a hypothetical Single Life Annuity that, if it were paid to the Participant and commenced as of the actual commencement date, would have an annual amount calculated in accordance with the last sentence of this paragraph (c). Such hypothetical Single Life Annuity is referred to in this Section 9.1 as the Participant’s “maximum equivalent compensation-adjusted Single Life Annuity.” In all cases, the annual amount of the maximum equivalent compensation-adjusted Single Life Annuity shall be equal to the defined benefit compensation limitation set forth in Subsection 9.1.1(b) above that applies to the Participant.

9.1.4 Applicable Mortality Assumption and Applicable Interest Rate .

(a) For purposes of this Section 9.1, the “applicable mortality assumption” means, with respect to adjusting any benefit or limitation of a retirement benefit, an appropriate mortality assumption based on the mortality table prescribed by the Secretary of the Treasury or his or her delegate as the applicable mortality table for purposes of Section 415(b) of the Code as of the commencement date of the benefit. Such table shall be based on the prevailing commissioners’ standard table, described in Section 807(d)(5)(A) of the Code, used to determine reserves for group annuity contracts, without regard to any other subparagraph of Section 807(d)(5) of the Code. For Plan benefits with commencement dates on or after December 31, 2002 and until changed by the Secretary of the Treasury or his or her delegate, the mortality table referred to in the foregoing provisions of this paragraph (b) shall be deemed to be the table prescribed in Revenue Ruling 2001-62.

 

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(b) Also for purposes of this Section 9.1, the “applicable interest rate” means, with respect to adjusting any benefit or limitation applicable to any single sum form of benefit, an interest rate determined as follows:

(1) when the commencement date of the benefit occurs during any limitation year that begins prior to January 1, 2008, the annual interest rate on 30-year Treasury securities for the second calendar month which precedes the first calendar month included in the Plan Year in which falls such commencement date and as such rate is published (in a revenue ruling, notice, or other written form) by the Internal Revenue Service under Code Section 417(e)(3) for such month; and

(2) when the commencement date of the benefit occurs during any limitation year that begins on or after January 1, 2008, the adjusted first, second, and third segment rates (as such terms are defined in Code Section 417(e)(3)(D)) applied under rules similar to the rules of Code Section 430(h)(2)(C) for the second calendar month which precedes the first calendar month included in the Plan Year in which falls such commencement date and as such rate is published (in a revenue ruling, notice, or other written form) by the Internal Revenue Service under Code Section 417(e)(3) for such month.

9.1.5 Reduction for Participation or Service of Less Than Ten Years .

(a) In the case of a Participant who has less than ten years of participation in this Plan when his or her retirement benefit under the Plan commences, the defined benefit dollar limitation shall be adjusted for all purposes of this Section 9.1 (including for purposes of determining the maximum equivalent age-adjusted Single Life Annuity described in Step 2 of Subsection 9.1.3 above) so as to be equal to the defined benefit dollar limitation (determined without regard to this Subsection 9.1.5) multiplied by a fraction. The numerator of such fraction is the Participant’s years (and any fraction thereof) of participation in the Plan at the time his or her benefit commences (or 1, if greater), and its denominator is ten.

(b) Further, in the case of a Participant who has less than ten years of Vesting Service as of the date on which his or her retirement benefit under the Plan commences, the defined benefit compensation limitation shall be adjusted for all purposes of this Section 9.1 (including for purposes of determining the maximum equivalent compensation-adjusted Single Life Annuity described in Step 3 of Subsection 9.1.3 above) so as to be equal to such limitation (determined without regard to this Subsection 9.1.5) multiplied by a fraction. The numerator of such fraction is the Participant’s years of Vesting Service as of the date his or her benefit commences (or 1, if greater), and its denominator is ten.

9.1.6 Preservation of Prior Plan Benefits . Notwithstanding any of the foregoing provisions of this Section 9.1, in no event shall the foregoing provisions of this Section 9.1 cause by themselves a Participant’s Accrued Benefit (or the annual or lump sum amount of a Participant’s actual retirement benefit under the Plan) to be less than his or her Accrued Benefit determined as of (or the annual or lump sum amount that would apply to his actual retirement benefit if the Participant had earned no additional benefit amount after and in fact had ceased to be a Covered Employee no later than) December 31, 2007, to the extent such Accrued Benefit (or such annual or lump sum amount of his actual retirement benefit) is determined solely on the basis of the provisions of the Plan that were both adopted and in effect before April 5, 2007

 

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(including the provisions of the Plan that then reflected the requirements of Section 415 of the Code).

9.1.7 Combining of Plans . If any other defined benefit plans (as defined in Section 414(j) of the Code) in addition to this Plan are maintained by one or more Affiliated Employers, then the limitations set forth in this Section 9.1 shall be applied as if this Plan and such other defined benefit plans are a single plan. If any reduction or adjustment in a Participant’s retirement benefit is required by this Section 9.1, such reduction or adjustment shall when necessary be made to the extent possible under any of such other defined benefit plan or plans in which the Participant actively participated ( i.e. , performed service which is taken into consideration in determining the amount of his or her benefit under the benefit formulas of the other plan or plans) at a later point in time (that occurs by the end of the applicable limitation year) than the latest point in time (that occurs by the end of the applicable limitation year) at which he or she actively participated in this Plan (provided such other plan or plans provide for such adjustment in such situation). To the extent still necessary, such adjustment shall be made under this Plan.

9.1.8 IRS Regulations Issued Under Code Section 415 . For any limitation year that begins on or after January 1, 2008, the provisions of the final regulations issued by the Internal Revenue Service under Code Section 415 shall, to the extent and only to the extent they provide details as to the manner in which any of the requirements set forth in the foregoing provisions of this Section 9.1 are to be applied (such as details as to the application of such requirements when benefits are transferred to this Plan from another plan, when multiple commencement dates of a Participant’s Plan benefit are involved, or when an Affiliated Employer that maintains another defined benefit plan loses its status as an Affiliated Employer), be deemed to be incorporated into this Section 9.1.

9.2 Restrictions on Benefits Payable to Certain Highly Compensated Participants . The provisions set forth in this Section 9.2 shall apply notwithstanding any other provision of this Plan.

9.2.1 In the event of the termination of the Plan, the benefit otherwise payable under the Plan to any Participant who is a Highly Compensated Employee (or a Former Highly Compensated Employee) with respect to the Plan Year in which such Plan termination occurs shall be limited to a benefit which is nondiscriminatory under Section 401(a)(4) of the Code. To the extent necessary, any assets otherwise allocable upon the Plan’s termination under Section 14.3 below to a Participant who is a Highly Compensated Employee (or Former Highly Compensated Employee) for the Plan Year in which the Plan’s termination occurs shall be reallocated to other Participants so that this provision is not violated. For purposes hereof, however, a benefit applicable to such a Highly Compensated Employee (or Former Highly Compensated Employee) upon the Plan’s termination shall be considered to be nondiscriminatory under Section 401(a)(4) of the Code if each Participant who is not a Highly Compensated Employee (or Former Highly Compensated Employee) with respect to the Plan Year in which the Plan’s termination occurs and who is entitled to a benefit under the Plan upon the Plan’s termination receives upon such termination a proportion of the then present value of his or her Accrued Benefit under the Plan which is at least equal to the proportion of the then present value of the Accrued Benefit receivable upon the Plan’s termination by such Highly Compensated Employee (or Former Highly Compensated Employee).

 

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9.2.2 Subject to the provisions of Subsections 9.2.3 and 9.2.4 below, prior to the complete termination of the Plan and distribution of all Plan assets, the payments made during any Plan Year to a Participant who is a Restricted Participant for such Plan Year shall be restricted to the extent necessary so that such payments do not exceed the payments that would be made for such Plan Year if the Participant’s remaining retirement benefit under the Plan was being paid in the form of a Single Life Annuity.

9.2.3 Subject to the provisions of Subsection 9.2.4 below but notwithstanding the provisions of Subsection 9.2.2 above, prior to the complete termination of the Plan and distribution of all Plan assets, the retirement benefit payments made during any Plan Year to a Participant who is a Restricted Participant for such Plan Year may exceed the limit set forth in Subsection 9.2.2 above to the extent the method under which the Participant’s retirement benefit is being paid calls for such payments, provided that the Plan and the Participant establish an agreement which meets the requirements set forth in the following paragraphs of this Subsection 9.2.3 in order to secure repayment to the Plan of any amount necessary for the distribution of assets upon the Plan’s termination to satisfy Section 401(a)(4) of the Code.

(a) During any such Plan Year, the amount that may be required to be repaid to the Plan by the Participant is the restricted amount. For this purpose, the “restricted amount” means the excess of the accumulated amount of the retirement benefit payments made to the Participant over the accumulated amount of the Participant’s nonrestricted limit. The Participant’s “nonrestricted limit” for this purpose means the retirement benefit payments that could have been made to the Participant, commencing when retirement benefit payments initially commenced to the Participant, had the Participant received his or her retirement benefit in the form of a Single Life Annuity. Further, an “accumulated amount” means, with respect to any payment, the amount of such payment plus interest thereon from the date of such payment (or the date such payment would have been made) to the date of the determination of the restricted amount, compounded annually from the date of such payment (or the date such payment would have been made), at the rate determined under Section 411(c)(2)(C) of the Code in effect on the date of the determination of the restricted amount.

(b) In order to secure the Participant’s repayment obligation of the restricted amount, prior to receipt of a distribution the Participant must agree that upon distribution the Participant will promptly deposit in escrow with an acceptable depositary property having a fair market value equal to at least 125% of the restricted amount. The obligation of the Participant under the repayment agreement alternatively can be secured or collateralized by posting a bond equal to at least 100% of the restricted amount. For this purpose, the bond must be furnished by an insurance company, bonding company, or other surety approved by the U.S. Treasury Department as an acceptable surety for Federal bonds. As another alternative, the Participant’s obligation under the repayment agreement can be secured by a bank letter of credit in an amount equal to at least 100% of the restricted amount.

(c) Amounts in the escrow account in excess of 125% of the restricted amount may be withdrawn for the Participant. Similar rules apply to the release of any liability in excess of 100% of the restricted amount where the repayment obligation has been secured by a bond or a letter of credit. If, however, the market value of the property in the escrow account falls below 110% of the restricted amount, the Participant is obligated to deposit additional property to bring the value of the property held by the depositary up to 125% of the restricted amount. In addition, the Participant may be given the right to receive any income from the

 

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property placed in escrow, subject to the obligation to maintain the value of the property as described.

(d) A depositary may not redeliver to the Participant any property held under such an agreement, other than amounts in excess of 125% of the restricted amount, and a surety or bank may not release any liability on such a bond or letter of credit, unless the Committee certifies to the depositary, surety, or bank that the Participant (or the Participant’s estate) is no longer obligated to repay any amount under the agreement. The Committee will make such a certification if at any time after the distribution commences either that any of the conditions of Subsection 9.2.4 below are met or that the Plan has terminated and the benefit received by the Participant is nondiscriminatory under Section 401(a)(4) of the Code. Such a certification by the Committee terminates the agreement between the Participant and the Plan.

9.2.4 The restrictions set forth in Subsections 9.2.2 and 9.2.3 above shall not apply to any Participant if either: (i) after payment to such Participant of all benefits payable to him or her under the Plan, the value of all assets of the Plan equals or exceeds 110% of the then value of the Plan’s current liabilities (as defined in Section 412(l)(7) of the Code); (ii) the entire value of such Participant’s retirement benefit under the Plan is less than 1% of the then value of the Plan’s current liabilities (as defined in Section 412(l)(7) of the Code); or (iii) the entire value of such Participant’s retirement benefit under the Plan is $5,000 or less.

9.2.5 For purposes of Subsections 9.2.2 through 9.2.4 above, a Participant shall be considered a “Restricted Participant” for any Plan Year if he or she is one of the 25 Highly Compensated and Former Highly Compensated Employees for such Plan Year with the greatest Compensation. In determining which of the Highly Compensated and Former Highly Compensated Employees for any Plan Year have the 25 greatest Compensations, the Compensation to be considered for any such Highly Compensated or Former Highly Compensated Employee shall be the highest Compensation he or she received in such Plan Year or any other Plan Year under which his or her Compensation or ownership in an Affiliated Employer made him or her a Highly Compensated or Former Highly Compensated Employee for the subject Plan Year.

 

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ARTICLE 10

ADDITIONAL RETIREMENT AND DEATH BENEFIT PROVISIONS

10.1 Incompetency . Every person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally or legally competent and of age until the date on which the Committee receives written notice that such person is incompetent or a minor for whom a guardian or other person legally vested with the care of his or her person or estate has been appointed. If the Committee finds that any person to whom a benefit is payable under the Plan is unable to care for his or her affairs because he or she is incompetent or is a minor, any payment due (unless a prior claim therefor has been made by a duly appointed legal representative) may be paid to the spouse, a child, a parent, a brother, or a sister of such person, or to any person or institution deemed by the Committee to have incurred expense for such person. If a guardian of the estate of any person receiving or claiming benefits under the Plan is appointed by a court of competent jurisdiction, benefit payments may be made to such guardian provided that proper proof of appointment and continuing qualification is furnished in a form and manner acceptable to the Committee. Any payment made pursuant to this Section 10.1 shall be a complete discharge of liability therefor under the Plan.

10.2 Commercial Annuity Contracts and Other Administrative Adjustments of Benefits .

10.2.1 Notwithstanding any other provision of the Plan to the contrary, in its sole discretion, the Committee may elect to distribute a retirement or death benefit by the purchase and delivery to the applicable Participant (or beneficiary) of a commercial annuity contract from an insurance company. In such an event delivery to and acceptance by such Participant (or beneficiary) of such contract shall be in complete satisfaction of any claim the Participant (or beneficiary) or any person claiming by or through such Participant (or beneficiary) may have for benefits under this Plan. The use of an annuity contract shall not itself cause any optional benefit form otherwise available to the Participant (or, if a death benefit is involved, his or her beneficiary) under the Plan to be eliminated.

10.2.2 Notwithstanding any other provision of the Plan to the contrary, as an administrative convenience, if the monthly amount of any retirement or death benefit which is payable under the Plan in the form of an Annuity would otherwise be less than $50, the Committee may direct that such benefit begin to be paid in quarterly installments instead of monthly installments at any time.

10.3 Timing of Benefit Distributions .

10.3.1 For purposes of the Plan, each benefit payment under the Plan shall always be made “as of” a certain date specified in an appropriate section of the Plan, which means that the amount of the payment shall be determined as of such date and the actual payment shall be made within a reasonable period on or after (or, in limited cases, prior to) such date (to allow the Plan the opportunity to ascertain the applicable person’s entitlement to and the amount of the benefit payment and to process and payout such benefit payment within a reasonable administrative period after or before the date as of which such benefit payment’s amount is determined).

 

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10.3.2 Further, the date “as of” which a benefit commences to be paid to a person under the Plan is sometimes called such benefit’s “commencement date” in the other provisions of this Plan.

10.3.3 If a person entitled to a benefit hereunder dies subsequent to the date as of which such payment was to have been made but, because of administrative reasons, prior to the actual payment thereof, such benefit shall be paid to his or her estate.

10.3.4 If, notwithstanding the foregoing, a Participant (or a beneficiary claiming through him or her) who is entitled to a benefit hereunder cannot reasonably be located, then such benefit shall thereupon be deemed forfeited. If, however, the lost Participant (or the beneficiary claiming through him or her) thereafter makes a claim for the amount previously forfeited hereunder, such benefit shall be paid or commence, with any unpaid installments thereof which otherwise would have previously been paid also being paid (but without any interest credited on such unpaid installments), as soon as administratively possible.

10.4 Nonalienation of Benefits .

10.4.1 Except as is provided in (i) Section 206(d)(4) of ERISA and Section 401(a)(13)(C) of the Code and (ii) the provisions of Subsections 10.4.2 and 10.4.3 below, but to the extent otherwise permitted by law, no benefit payable under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, whether voluntary or involuntary, nor shall any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such benefit.

10.4.2 The Committee shall, however, adopt procedures as necessary so as to allow benefits to be assigned in connection with qualified domestic relations orders (as defined in and in accordance with the provisions of Section 206(d)(3) of ERISA and Section 414(p) of the Code). In this regard, the Plan will permit a benefit to be paid at any time to a Participant’s alternate payee (as also is defined in ERISA Section 206(d)(3) and Code Section 414(p)) if directed by a qualified domestic relations order and in compliance with all requirements applicable to a qualified domestic relations order, even if the Participant has not yet ceased to be an Employee and has not attained his or her earliest retirement date (again as defined in ERISA Section 206(d)(3) and Section 414(p) of the Code).

10.4.3 In addition, if any person with a right to a survivor or death benefit under the Plan (that derives from a benefit accrued under the Plan by a deceased Participant) files a qualified disclaimer with a Plan representative that such person disclaims any interest in such benefit, then the payment of such survivor or death benefit shall be determined as if the disclaiming person predeceased the Participant. For purposes of the Plan, a “qualified disclaimer” of a disclaiming person means an irrevocable and unqualified refusal by the disclaiming person to accept any interest in Plan benefits, provided that all of the following requirements are met: (i) the purported disclaimer is in writing; (ii) the purported disclaimer is received by a Plan representative within nine months after the date of the Participant’s death; (iii) the disclaiming person has not accepted or been paid any benefits under the Plan; (iv) as a result of the disclaimer the benefits of the Plan will pass to a person other than the disclaiming person; and (v) the purported disclaimer is determined by the Committee to meet any other requirements

 

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of Code Section 2518 in order to be considered a qualified disclaimer for purposes of such section and to meet any requirements of applicable state law.

10.5 Actuarial Assumptions .

10.5.1 Under this Plan, any reference to actuarial equivalent, actuarially equivalent, or actuarial equivalence means or refers to equality in value of the aggregate amounts of a benefit when compared to the aggregate amounts of such benefit if paid or determined in a different form, at a different time, or both in a different form and at a different time, as the case may be.

10.5.2 Unless otherwise set forth in an applicable section of the Plan, when the Plan requires a determination that a benefit, if it were paid in the form of an Annuity and to commence as of any particular date, would be actuarially equivalent to such benefit if it were to be paid in a different form of Annuity but to commence as of the same date, the actuarial assumptions to be used in making such determination shall be the assumptions set forth in part 2 of Schedule A to this Plan.

10.5.3 In addition, unless otherwise set forth in an applicable section of the Plan, when the Plan requires a determination that, as of any date (for purposes of this Subsection 10.5.3, the “subject date”), (i) a benefit, if it were paid in the form of a Single Life Annuity which commences as of any date, is actuarially equivalent to the amount credited or projected to be credited to a Participant’s Cash Balance Account as of the subject date or any earlier date (or is actuarially equivalent to the present value of such benefit), (ii) a benefit, if it were paid in the form of a lump sum cash payment which is made as of the subject date, is actuarially equivalent to such benefit if it were to be paid in the form of a Single Life Annuity which commences as of the subject date or any later date, (iii) a benefit, if it were paid in the form of a Single Life Annuity which commences as of any date, is actuarially equivalent to such benefit if it were to be paid in the form of a Single Life Annuity which commences as of any later date, or (iv) the present value of a benefit as of the subject date, the actuarial assumptions to be used in making such determination shall be: when the applicable benefit’s commencement date occurs before January 1, 2008, the GATT actuarial factors alone; when the applicable benefit’s commencement date occurs on or after January 1, 2008 and before April 1, 2008, the PPA actuarial factors or the GATT actuarial factors, whichever produces the greater benefit amount; or when the applicable benefit’s commencement date occurs on or after April 1, 2008, the PPA actuarial factors alone. For purposes of this Subsection 10.5.3, the following definitions shall apply.

(a) The “PPA actuarial factors” mean the combination of the applicable PPA mortality assumption and the applicable PPA interest rate. Both of such terms are defined in the following subparagraphs of this paragraph (a).

(1) The “applicable PPA mortality assumption” means an appropriate mortality assumption determined under the mortality table published by the Internal Revenue Service under Code Section 417(e)(3) for the calendar year in which occurs the date as of which the applicable benefit is paid. In accordance with the immediately preceding sentence: (i) the applicable mortality assumption for any applicable Plan benefit with a commencement date that occurs in 2008 (but no later calendar year) shall be determined under the 2008 Applicable Mortality Table as published by the Internal Revenue Service in the appendix to Revenue Ruling 2007-67; (ii) the applicable mortality assumption for any applicable Plan benefit

 

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with a commencement date that occurs in 2009, 2010, 2011, 2012, or 2013 (but no later calendar year) shall be determined under the column labeled “Unisex” of the applicable mortality tables that apply to the specific calendar year (2009, 2010, 2011, 2012, or 2013) in which such commencement date occurs as such tables are published in the appendix to the Internal Revenue Service’s Notice 2008-85; and (iii) the applicable mortality assumption for any applicable Plan benefit with a commencement date that occurs in a calendar year later than 2013 shall be determined under the applicable mortality table published (in a revenue ruling, notice, or other written form) by the Internal Revenue Service under Code Section 417(e)(3) for such later calendar year.

(2) The “applicable PPA interest rate” means the adjusted first, second, and third segment rates (as such terms are defined in Code Section 417(e)(3)(D)) applied under rules similar to the rules of Code Section 430(h)(2)(C) for the second calendar month which precedes the first day of the calendar year in which the applicable benefit is paid and as such rate is published (in a revenue ruling, notice, or other written form) by the Internal Revenue Service under Code Section 417(e)(3) for such month.

(b) The “GATT actuarial factors” mean the combination of the applicable GATT mortality assumption and the applicable GATT interest rate. Both of such terms are defined in the following subparagraphs of this paragraph (b).

(1) The “applicable GATT mortality assumption” means an appropriate mortality assumption based on the mortality table prescribed by the Secretary of the Treasury or his or her delegate as the applicable mortality table under Section 417(e)(3) of the Code as of the date as of which the applicable benefit is paid. Such table is based on the prevailing commissioners’ standard table, described in Section 807(d)(5)(A) of the Code, used to determine reserves for group annuity contracts, without regard to any other subparagraph of Section 807(d)(5) of the Code. For Plan benefits with commencement dates on or after December 31, 2002, the mortality table referred to in the foregoing provisions of this paragraph (b) shall be deemed to be the table prescribed in Revenue Ruling 2001-62. The provisions of the immediately preceding sentence shall not only be effective as of the Effective Amendment Date but shall also, for each Prior Plan that was in effect on December 31, 2002, be effective as of December 31, 2002 with respect to any Plan benefits with commencement dates on or after December 31, 2002.

(2) The “applicable GATT interest rate” means the annual interest rate on 30-year U.S. Treasury securities for the second calendar month which precedes the first day of the Plan Year in which the applicable benefit is paid and as such rate is published (in a revenue ruling, notice, or other written form) by the Internal Revenue Service under Code Section 417(e)(3) for such month for pension plan purposes.

10.5.5 Except as otherwise provided in applicable Treasury regulations, if this Plan is amended to change any of the actuarial assumptions used in the Plan to determine actuarial equivalence or the present value of a benefit, then any Plan benefit applicable to a Participant who is a Participant on the effective date of the amendment which is determined in part by using the Plan’s factors for determining actuarial equivalence or present value shall have its amount determined in accordance with the provisions of the Plan in effect as of the date the benefit is to commence or be paid; except that if the value of such benefit would be increased by both (i) substituting the Participant’s Accrued Benefit determined as of the day next preceding

 

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the effective date of the amendment for the Participant’s then current Accrued Benefit and (ii) substituting the actuarial assumptions used in the Plan which were in effect as of the day next preceding the effective date of the amendment for the then current actuarial assumptions, such substitutions shall be made for purposes of such determination.

10.6 Applicable Benefit Provisions . Subject to Sections 7.6 and 7.7 above, any benefit to which a Participant becomes entitled (or any death benefit to which such Participant’s spouse or other beneficiary becomes entitled) shall be determined (as to its amount and form and commencement date of payment) on the basis of the provisions of the Plan in effect as of the earlier of the date the Participant last ceases to be an Employee (or, if earlier, the date as of which such benefit begins to be paid under the Plan) notwithstanding any amendment to the Plan adopted subsequent to such date, except for subsequent amendments which are by their specific terms or by applicable law made applicable to such Participant (or his or her spouse or other beneficiary).

10.7 Coverage of Pre-Effective Amendment Date Participants . Except as is otherwise specifically provided in this Plan, the provisions of this Plan only apply to persons who become Participants in this Plan on or after the Effective Amendment Date under the eligibility provisions of this Plan and to such persons’ benefits which have not begun to be paid prior to the Effective Amendment Date. However, any person who was a participant in one or more Prior Plans and, while never becoming a Participant in this Plan on or after the Effective Amendment Date under the eligibility provisions of this Plan, still had a nonforfeitable right to an unpaid benefit under the Prior Plans as of the date immediately preceding the Effective Amendment Date shall be considered a participant in this Plan to the extent of his or her interest in such benefit. The amount of such benefit, the form in which such benefit is to be paid, and the conditions (if any) which may cause such benefit not to be paid shall, except as otherwise specifically provided in this Plan or in the Prior Plans, be determined solely by the versions of the Prior Plans in effect at the time he or she ceased to be an Employee.

10.8 Forfeitures .

10.8.1 A Participant who ceases to be an Employee when he or she is not then entitled to any benefit under any other provision of the Plan shall be deemed to have received a complete distribution of his or her vested benefit under the Plan (of zero dollars) upon the date of such termination of employment and shall forfeit his or her entire interest under the Plan (including his or her interest in any benefit otherwise determined for him or her under the Plan) as of such date.

10.8.2 In addition, if a Participant who forfeited his or her entire interest under the Plan upon his or her prior ceasing to be an Employee under Subsection 10.8.1 above is rehired as an Employee by the end of the first Six-Year Break-in-Service commencing after his or her prior ceasing to be an Employee, his or her previously forfeited interest shall be restored to his or her credit under the Plan.

10.9 Direct Rollover Distributions . Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee’s election under this Section 10.9, a distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution otherwise payable to him or her paid directly to an eligible retirement plan specified by the distributee in a